AUSTRALIA: Simeon Wines seeks US tie-up

By just-drinks.com editorial team | 21 June 2000

Simeon Wines, Australia's third largest wine producer, has held preliminary talks with several US wineries about a possible merger. Managing director, Neil McKenzie, discussed the move in the past two weeks while in the US.Two of the wineries were of particular interest, he said, not giving further details.McKenzie said that there was increasing interest by US wine companies in Australian companies.Until now they had been "scared" by high earnings multiples but it would only be "a couple of years" before at least one and possibly more major Californian companies made significant investments here. Declining multiples and a current favourable exchange rate ($A1=US60c) has led to the greater interest.McKenzie predicted that Simeon, which had a total crush of 147,000 tonnes in 2000, would crush 170,000 tonnes in 2001 and was confident of domestic and international volume and margin growth in 2000-2001. EBIT, based on existing customer contracts, was forecast to rise by 20%. McKenzie predicted that sales of Big River wines in the US, marketed in a joint venture with Cordier, would increase by 30% and that sales to the UK and Europe would increase by 25% and 20% respectively.Seven German supermarkets had ordered a total 300,000 cases of Kangaroo Ridge label wines for marketing in Olympic Games promotions.Chris Snow

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Simeon Wines, Australia's third largest wine producer, has held preliminary talks with several US wineries about a possible merger. Managing director, Neil McKenzie, discussed the move in the past two weeks while in the US.Two of the wineries were of particular interest, he said, not giving further details.McKenzie said that there was increasing interest by US wine companies in Australian companies.Until now they had been "scared" by high earnings multiples but it would only be "a couple of years" before at least one and possibly more major Californian companies made significant investments here. Declining multiples and a current favourable exchange rate ($A1=US60c) has led to the greater interest.McKenzie predicted that Simeon, which had a total crush of 147,000 tonnes in 2000, would crush 170,000 tonnes in 2001 and was confident of domestic and international volume and margin growth in 2000-2001. EBIT, based on existing customer contracts, was forecast to rise by 20%. McKenzie predicted that sales of Big River wines in the US, marketed in a joint venture with Cordier, would increase by 30% and that sales to the UK and Europe would increase by 25% and 20% respectively.Seven German supermarkets had ordered a total 300,000 cases of Kangaroo Ridge label wines for marketing in Olympic Games promotions.Chris Snow

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