Australian wine producers, Evans & Tate and Cranswick Premium Wines, have confirmed that they are in talks which could lead to a commercial alliance or even a full-scale merger. Shares in the two companies surged after the news was confirmed.

Cranswick said that while the talks were still at an early stage, it would know within the next month if collaboration between the two companies was viable. "Within four weeks we'll be in a position to decide whether both parties are interested enough to move to serious merger discussions or whether we'll just remain friends," said managing director, Graham Cranswick-Smith.

Analysts were generally enthusiastic about a potential merger between the two which would produce a single group with a market capitalisation of more than A$110m and annual branded-wine production of 2.5m cases.

The two companies are a potentially good fit. Evans & Tate, which has limited activities in the export market, would gain access to Cranswick's distribution network in Europe while Cranswick would gain access to a highly regarded wine portfolio.