Treasury Wine Estates to buy California's DAOU Vineyards for $900 million

By Stuart Condie

SYDNEY -- Treasury Wine Estates (AU:TWE) will buy California-based DAOU Vineyards for up to $1 billion in a move the Australia-based producer said provides it with scale to launch a future standalone Americas luxury division.

Treasury on Tuesday said it agreed to pay $900 million up front for what it called the fastest-growing luxury wine brand in U.S. trade over the 12 months through Oct. 8. It could pay up to $100 million in additional earn-outs linked to growth targets over the three years through 2027.

The ASX-listed company said that the acquisition would accelerate its focus on its so-called premiumization strategy. Treasury over recent years has been increasing its focus on higher-margin premium wines in response to changing consumer trends and a crowded lower-end market.

Treasury will fund the acquisition with a fully underwritten entitlement offer of 825 million Australian dollars ($525.9 million), a A$157 million share placement, and $311 million of debt from a new $350 million facility.

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10-30-23 1823ET

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