The offer from KKR values Treasury Wine Estates at US$2.85bn

The offer from KKR values Treasury Wine Estates at US$2.85bn

Treasury Wine Estates has received - and rejected - a takeover offer from private equity firm Kohlberg Kravis Roberts & Co.

In a statement to the Australian Stock Exchange earlier today (20 May), TWE said that KKR has offered AUD4.70 (US$4.40) per share. The "preliminary, indicative, non-binding and conditional proposal" has been turned down by TWE's board.

The company said: "The board has considered the KKR proposal ... and concluded that the proposal does not reflect the fundamental value of the company.

"It is therefore not in the best interests of shareholders."

The offer, which values TWE at around US$2.85bn, was made public by the Australian firm after KKR "had spoken to one or more of TWE’s shareholders". Prior to this, the proposal, which was initially tabled on 16 April, had been kept confidential at KKR's request.

The announcement marks the third M&A-related statement by TWE to the ASX since the beginning of this month. On 2 May, the company commented on reports linking Pernod Ricard to its US wine assets. Then, last week, TWE also moved on speculation of a similar move by Constellation Brands.

In today's announcement, TWE pointed to the efforts of its recently-appointed CEO as reason enough not to accept KKR's offer. "Since commencing as TWE’s chief executive officer on 31 March, Michael Clarke has been progressing with plans to improve the company’s performance," the statement read. "These plans ... are fundamental to a turnaround in TWE’s short-term performance and the company’s ambitions to deliver long-term sustainable growth."

While the company's board said it will not take "any further action in relation to the proposal", the door remains open for KKR to make an improved bid. "The board of TWE remains focused on maximising shareholder value and will carefully consider any future proposal that is consistent with this objective," the statement concluded.

At the close, TWE's share price had leapt by 17.9% to AUD4.80.

To read the company's statement to the ASX, click here.

Expert analysis

Treasury Wine Estates Ltd in Wine (World)

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Treasury Wine Estates has faced serious challenges since its spin-off from Foster’s Group in 2011. The US, which was a key component of its turnaround plan, has thus far failed to pay dividends. In more