Treasury Wines blends American wines with the acquisition of Frank Family Vineyards

Australian winemaker Treasury Wine Estates Ltd. announced that it will buy American luxury winemaker Frank Family Vineyards for $ 315 million, saying the deal offers a rare opportunity to bolster its premium wine portfolio.

The Treasury said Frank Family Vineyards, based in Napa Valley, Calif., Is highly complementary to its business in America and fills a key gap in the luxury chardonnay portfolio. The Treasury said it was well positioned to grow the business given its primary luxury goods sales credentials, nationwide distribution network and California asset base.

“This is a compelling strategic and financial investment, comfortably meeting our investment criteria and which we hope will generate attractive growth and financial returns for TWE shareholders over the long term,” said said treasury general manager Tim Ford.

Analysts expected the Treasury to make acquisitions, with winemakers focusing more on the lucrative high-end segments of the market. The Treasury sold some of its low-end U.S. brands and assets and said on Thursday the process was largely complete, with total net cash proceeds of around A $ 300 million ($ 218 million).

He said he was using these products to help pay for Frank Family Vineyards. The Treasury added that Frank Family Vineyards has a long-term history of strong revenue and profit growth, as well as profit margins in the range of 35% to 40%.

The acquisition is expected to be finalized in December.


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