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Editor's Viewpoint - Has Treasury Wine Estates found its map in time?

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Who'd have thought it? Treasury Wine Estates, a company that, in the recent past, has scrabbled around trying to find someone to buy its wine business, has finally received a takeover offer. And, they've only gone and rejected it.

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Strange days indeed.

I grant you, I may be suffering from selective memory here. Treasury's desire to hive off the wine side hails from the days when it was part of beer and wine company Foster's Group. Since the demerger of the two businesses three years ago, Treasury has been going about its business without issuing any come-and-get-me pleas.

There can be little doubt, however, that recent headaches will have prompted Treasury to seriously consider last month's AUD4.70-per-share offer from US private equity firm Kohlberg Kravis Roberts & Co.

But, today's announcement that it has turned down the offer is a clear vote of confidence from Treasury's board in new CEO Michael Clarke. With a background that includes stints at Coca-Cola Co and Kraft Foods, the South African was brought on-board in February to take a business-focussed approach to turning around the wine company. He has done just that today, when he announced plans to fund a healthy spend on Treasury's brands by taking an axe to its costs.

The rejection of KKR's offer – which represented a 15% premium to Treasury's closing price yesterday – gives Clarke room to manoeuvre, and his most recent plan looks, at very least, like a start down the right road. After all, when your share of voice sees your actual product overshadowed by market 'chatter' and company talk, then something has gone seriously wrong somewhere along the line.

However, what Treasury's and – more importantly – its shareholders will think of any improved offer from KKR will decide how far down Clarke's road the company can expect to travel.


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