Treasury Wine buys California’s Daou Vineyards for $1.6b

afr.com:

Penfolds owner Treasury Wine Estates is buying high-end Californian wine group Daou Vineyards in a deal worth up to $US1 billion ($1.6 billion) as it steps up expansion in the United States luxury wine market.

The acquisition is being partly funded by a capital raising of $825 million, to be priced at $10.80 per share. Treasury Wine shares went into a trading halt on Tuesday, having last changed hands at $12.10.

Treasury Wine said on Tuesday the upfront cost of the buyout was $US900 million, plus an earn-out agreement of up to $US100 million which applies if certain revenue targets are reached until the end of calendar 2027.

Daou Vineyards is based in the Paso Robles region of California and was established in 2007 by brothers Georges and Daniel Daou.

Treasury Wines boss Tim Ford is going all out on US luxury wine.  Eamon Gallagher

Treasury Wine chief executive Tim Ford said the “acquisition reflects the continuation and acceleration of our luxury-led portfolio premiumisation strategy”.

Daou Vineyards produces wines in price brackets between $US20 to $US500 a bottle. It is forecast to generate earnings before interest and tax and the SGARA accounting standard of $US63 million in calendar 2023.

As part of the deal, Treasury Wine is also undertaking a $157 million placement of shares to the Daou owners at $11.97 a share.

More to come