Treasury Wine price dips after takeovers rejected

Photo / NZME.

Australia's largest winemaker, Treasury Wine Estates, has rejected takeover proposals from two global private equity firms, prompting a sharp fall in the company's share price.

Treasury, which owns Penfolds, Wolf Blass and a host of other prominent labels, had been in talks with Kohlberg Kravis Roberts and a rival suitor, believed to be TPG.

The two firms each proposed paying A$5.20 a share, valuing Treasury at almost A$3.4 billion.

But after talking with its major shareholders about the proposals while the two suitors appraised Treasury's business, the winemaker decided to knock them back.

Most of Treasury's major shareholders believed the proposed offers were simply too low.

Treasury chief executive Michael Clarke said that after two months of talks with the suitors, it became apparent that they were unable to address potential regulatory concerns in the US or finalise an acceptable financing structure.

Clarke said he did not think that either of the suitors would return with fresh proposals.

"I think it's over, is my point of view," he said.

Investors were disappointed and pushed down Treasury's shares by 8.5 per cent to close at A$4.50.

IG market strategist Evan Lucas said Treasury's share price received a boost when the takeover proposals emerged earlier this year, but was now under pressure given the door had been closed to the private equity firms.

Clarke said Treasury could deliver better value for shareholders through its turnaround strategy, which includes moves to cut costs, bolster its prestige brands, and better manage cheaper brands.

- AAP