Treasury Looking Like A Bargain To AnalystsJuly 22, 2011
Just a few weeks after rumors began swirling that China’s Bright Food would bid for Treasury Wine Estates, several analysts are touting Treasury’s upside, particularly in Asia and other emerging markets, and asserting its current valuation represents a bargain. Analysts from Deutsche Bank, Bank of America, PNC Capital Advisors and others all see opportunities for Treasury, according to a Bloomberg report. The company’s market value has risen less than 3% to A$2.2 billion ($2.4b) since being spun off from Foster’s Group in May. Bank of America estimates that its inventories alone are worth at least A$2 billion ($2.2b). Meanwhile, with analysts expecting the strong Australian dollar to depreciate against the U.S. dollar by as much as 14% by 2014, helping Aussie exports—and Australia slowly coming to terms with its oversupply issues—the major barriers to Treasury’s growth could prove short-lived.
Treasury’s share price jumped more than 10% to A$3.72 ($4.04) on July 4th following reports of Bright Food’s interest in the company, but the price has since receded, closing up 0.6% to A$3.46 ($3.75) on the Australian Securities Exchange today. Bright Food denied any imminent bid for Treasury, it did leave the door open to a future play, saying it’s considering wine acquisitions in Australia, France, Chile and/or the U.S. Last fall Treasury, then still part of Foster’s, also received an A$2.7 billion ($2.9b) bid from an unnamed suitor thought to be Cerberus Capital Management.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.