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Early Release Of TWE Results Spurs Expectations Of Deal Making

February 2, 2018

After Treasury Wine Estates moved up its half-year earnings announcement by two weeks, there’s increasing anticipation that the company is poised to make a significant acquisition.

The Australian Financial Review reports that TWE shareholders are on “high alert” for a major deal in the U.S., especially now that the company has fully digested its acquisition of the former Diageo wine business, purchased for $600 million in 2015, and announced a slew of route-to-market changes intended to strengthen its Americas business unit.

Last fall, it was rumored that TWE was working with Goldman Sachs toward a potential offer for Napa’s iconic Robert Mondavi Winery, part of the Constellation portfolio. At the time, TWE called the rumors “purely speculative,” but the company has been open about its desire to bolster its upscale offering in the U.S. CEO Michael Clarke told SND last year that the group continues to be on the hunt for luxury fruit and brands. “It’ll be fantastic if we can land one or two of the things we’re looking at,” he said.

A brand like Mondavi would more than fit the bill. However, the price would likely be steep, as the core Robert Mondavi Winery label has shown eye-catching growth over the past two years, surging 20% in the U.S. in 2017 to cross a quarter-million cases, according to Impact Databank.

In his remarks earlier this week on TWE’s half-year results, Clarke specifically cited the new U.S. route-to-market initiatives as laying the groundwork for M&A activity. “TWE is pursuing inorganic growth opportunities, particularly in the United States,” he said. “The route-to-market changes we’re making will certainly enhance our ability to extract maximum value from any future U.S. acquisition.”—Dan Marsteller

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