Treasury Wine rejects $2.9bn KKR bid

The Australian wine company refused the offer after learning the firm had spoken to shareholders.

A buyout offer from Kohlberg Kravis Roberts has been rejected by Australian wine company Treasury Wine Estates, the target company accusing the global private equity firm of potentially jeopardising confidentiality agreements, according to a statement.

The firm offered A$4.70 ($4.34; €3.17) per share for 100 percent of the company in mid-April, the price being a 27 percent premium to the closing share price on 15 April – the day preceding the offer – of A$3.69 per share.

The total deal value has been widely estimated at around A$3.1 billion ($2.9 billion).

At the time, KKR released a statement indicating it had made a “preliminary, indicative and non-binding offer” to acquire the business.

However, this week Treasury Wine rejected the offer, saying it had learned on Monday that KKR had approached one or more of its shareholders to discuss the proposal, risking the confidentiality of the situation.

“The board has considered the KKR proposal in the context of these renewed plans and concluded that the proposal does not reflect the fundamental value of the company and it is therefore not in the best interests of shareholders. The board of TWE does not intend to take any further action in relation to the proposal,” the statement from Treasury Wine said.

KKR declined to comment on the matter further than a statement it issued to the Australian Stock Exchange.

The firm confirmed the preliminary offer made last month, adding, “KKR has not executed a non-disclosure agreement with TWE, and access to company records per our requests has not been provided. In the last week, KKR advisers held discussions with certain shareholders of TWE on a wall-crossed, confidential basis and subject to appropriate confidentiality protocols.”

The refusal comes during a period of success for KKR in the Asia Pacific region. Having closed its $6 billion Asia Fund II in July last year, the firm has been actively investing across Asia.

KKR also enjoyed a 5x exit of Korean beer maker Oriental Brewery alongside co-investor Affinity Equity Partners earlier this year, the firms selling the business back to Anheuser-Busch InBev in a $5.8 billion deal, Private Equity International reported earlier.

Despite its experience in the sector, Treasury Wine explained to shareholders that KKR’s proposal would not fulfill the new chief executive officer’s plans to “improve the company’s performance, with a focus on improving brand prioritisation and investment, addressing structural challenges facing the business and reducing overhead costs.”