Australian vintner, Treasury Wine Estates Ltd. said it will buy U.S. luxury winemaker Frank Family Vineyards for $315 million, saying the deal offered a rare opportunity to bolster its high-end wine portfolio.
Treasury said Napa Valley, California-based Frank Family Vineyards is highly complementary to its Americas business and fills a key portfolio gap for luxury chardonnay. Treasury said it is well placed to grow the business given its leading luxury sales credentials, national distribution network and California asset base.
“This is a compelling strategic and financial investment, comfortably meeting our investment criteria and one we expect will deliver attractive growth and financial returns for TWE’s shareholders over the long-term,” Treasury Chief Executive Tim Ford said.
Analysts have expected Treasury to make acquisitions as winemakers focus more on the lucrative higher-end parts of the market. Treasury has been selling off some of its downmarket U.S. brands and assets and it said Thursday that process was largely complete, with total net cash proceeds of about 300 million Australian dollars (US$218 million).
It said it is using those proceeds to help pay for Frank Family Vineyards. Treasury added that Frank Family Vineyards has a long-term track record of delivering strong revenue and earnings growth, as well as earnings margins in the range of 35%-40%.
The acquisition is expected to be completed in December.