The US wine company Golden State Vintners said yesterday that it had received a higher counter offer from The Wine Group on the takeover bid it received earlier in the month from an investment group led by its chief executive Jeffrey O'Neill.

The Wine Group has offered to acquire GSV at a cash price of US$7.25 per share, valuing the deal at US$69m.

The board of GSV said it considered the Wine Group's terms and conditions "superior" to the plan and agreement of merger with the O'Neill Acquisition Company.

The O'Neill deal, which had a total value worth about US$96m, included US$6.85 per share in cash and an equity interest in the takeover group.

GSV said it had advised the O'Neill Group of the new offer and is prepared to terminate the O'Neill Merger Agreement.

However, under the terms of the O'Neill Merger Agreement, GSV is obligated to negotiate with the O'Neill Group until March 23, 2004, should an alternative higher bid be recived.

GSV also announced today that it was a named defendant, along with GSV's directors, in a purported class action lawsuit in the Court of Chancery in the State of Delaware.

GSV's directors stand accused of breaching their fiduciary duties by entering the O'Neill Merger Agreement by disgruntled shareholders, who are seeking to enjoin the O'Neill transaction, recover compensatory damages and an award of attorney's fees.

GSV said it believes the suit lacks merit and intends to defend the litigation vigorously.