NZ: Delegat's Group swoops for Oyster Bay Marlborough Vineyards
Delegat's moves to save Oyster Bay Marlborough Vineyards
Delegat's Group has moved to acquire full control of under-pressure Oyster Bay Marlborough Vineyards in order to protect its wine grape supplies for the Oyster Bay brand.
Delegat's said today (18 October) that it will seek to buy all remaining shares in Oyster Bay Marlborough Vineyards that it does not already own. The firm, which owns 54.9% of the grape grower, will offer to pay NZD1.8 per share.
Oyster Bay Marlborough Vineyards (OBMV) plunged into the red after a collapse in grape prices for its fiscal year to the end of June, raising concerns about the firm's ability to weather the storm currently enveloping the New Zealand wine industry.
The group is the premium grape supplier for Delegat's successful Oyster Bay wine brand and impairment charges related to losses at OBMV almost wiped out full-year profits at Delegat's in the same fiscal year.
Delegat's said that OBMV was too strategic for it to allow the group to fail. Its move to acquire all remaining shares follows an approach to Delegat's by OBMV's independent directors. OBMV would have breached a bank covenant earlier this year, but has been granted a waiver until the end of 2010.
"Given that Delegat's consider grape prices are unlikely to improve significantly in the short-term, any improvement in Oyster Bay's financial situation is unlikely," said Delegat's. It said that it intended to integrate OBMV into a "vertically integrated, diversified wine company".
Excluding charges, Delegat's group sales rose by 1% ahead of the firm's original guidance for the year to the end of June, while volume sales increased by 1% to 1.95m cases. "The Oyster Bay brand is gaining momentum in the important growth markets of the US and Canada," said managing director Jim Delegat.
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