Yarraman Winery has pulled out of talks with Drinks Americas Holdings over a possible acquisition of the Australian wine company.

Last month, Drinks Americas confirmed that it had signed a non-binding letter of intent to buy Global Beverages Asia, the name for the recently-merged Yarraman Winery and China-based wine and spirits distributor Asia Distribution Solutions (ADS) entity.

Yesterday (30 April), however, Yarraman said that it has ended the discussions and that the letter has been terminated.

"After careful consideration, the board of directors has determined that it is in the company's best interest to focus on the completion of the acquisition of Asia Distribution Solutions by Yarraman Winery, and the integration of the company's operations in China before further pursuit of other M&A initiatives," said Michael Kingshott, Yarraman's non-executive chairman.

"We intend to continue to develop our business as a leading, high-growth operator in the Chinese beverage industry. The combined companies of ADSL and Yarraman, soon to be renamed Global Beverage Asia (GBA), create one of the only vertically-integrated beverage industry companies in China.

"GBA's operations will include a robust beverage distribution platform, a major retailer of beer, wine & spirits and high quality proprietary wines from our GBA Australian vineyards."

ADS is in the process of being acquired by Australian wine company Yarraman, which, together with its Jugiong Vineyard, has the capacity to produce 160,000 cases of wine per year.

In addition to Yarraman Wines, the company also sells Ironstone, Santa Carolina, Bass Phillip, Vine San Pedro and La Barcia wines. Yarraman has tangible assets of US$45m.

ADS has Chinese operations in Shanghai, Chengdu, Beijing, and Shenzhen through wholly-owned distributors. The company also sells product in China through its 51%-owned chain of 'big box' or 'WineMall' stores, which ADSL expects to grow to around 50 outlets over the next three years.