Kohlberg Kravis Roberts & Co. (KKR) and Rhone Group LLC have raised the takeover bid for Australia-based global wine-making and distribution company Treasury Wines Estate, by nearly 11% to $3.2 billion. The new offer surely stands a chance to be reconsidered by the vintner, which had rejected the earlier offer on the pretext of it being too low.
The U.S. private-equity firms jointly offered A$5.20 for each of Treasury Wines’ share, up from the previously rejected figure of A$4.70 per share offered by Kohlberg Kravis in April. However, this time, with this more reasonable offer, the winemaker, which is struggling with waning sales in China and oversupply in U.S as well as fierce competition in its own backyard, may find the offer more lucrative.
In fact, Treasury Wines’ ordeals can be traced back to July last year, following the A$155-million write-down of U.S. business and a sales decline in China. More recently, a high currency rate along with a lull in the Australian wine industry, have added to its woes. These challenges have compelled the owner of Penfolds, Beringer and Wolfblass brands toward a restructuring drive, so as to improve its performance.
At this crucial juncture, Treasury Wines will surely assess the new offer more seriously to find turnaround secrets.
Kohlberg Kravis, on the other hand, is always on the lookout for companies with solid growth potential. Given the long-term growth prospect of the Australian wine industry, Treasury Wines seems a lucrative opportunity for Kohlberg Kravis.
Currently, Kohlberg Kravis carries a Zacks Rank #4 (Sell). Some better-ranked investment managers include Cohen & Steers Inc. (CNS), SEI Investments Co. (SEIC), and Affiliated Managers Group Inc. (AMG). While Cohen & Steers and SEI Investments sport a Zacks Rank #1 (Strong Buy), Affiliated Managers carries a Zacks Rank #2 (Buy).
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