just On Call - "Hundreds" of jobs on line as Treasury Wine Estates prepares cuts
TWE is to prioritise its high-value brands
Treasury Wine Estates may cut up to 5% of its workforce as part of a cost-cutting plan intended to turnaround falling profits and stave off takeover bids.
TWE's CEO, Michael Clarke, said yesterday (20 May) that job losses connected to the plan will number in the “hundreds” out of 3,500 employees. “It's just over 5% of our workforce that we're addressing,” Clarke told analysts and media on a conference call.
The announcement follows news yesterday that TWE has rejected a takeover bid from private equity firm Kohlberg Kravis Roberts & Co (KKR). The US$2.85bn offer was made public by the Australian firm after shareholders were leaked details of the deal.
TWE this month has also been linked to takeover bids for its US assets from Pernod Ricard and Constellation Brands.
Clarke yesterday refused to be drawn directly on the KKR bid, but said TWE's decision to reveal the offer did not necessarily mean dialogue was closed. “That's what we've had to share publicly and clearly if people want to engage or continue to engage, that's an option that they have open to them,” he said.
He also denied media reports that his company had not engaged fully with KKR in takeover talks. “Given that there's a serious offer on the table, we've had to take that offer very seriously,” he added.
Speaking about the AUD35m (US$32.7m) cost savings, which TWE announced yesterday, Clarke said he intends to prioritise about 20 of TWE's 80 brands as the company initially targets growth in its high-end portfolio.
“We will then be able to take some of that improved margin accretion and invest in the rest of the portfolio,” Clarke said.
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