Treasury Wine buys US vineyard for $1.41b, outlines equity raising

The news: Treasury Wine Estates will buy California-based DAOU Vineyards and its luxury wine brand, and has outlined an equity raising to fund the acquisition.

The numbers: It has agreed to pay USD900 million ($1.41 billion) for DAOU, plus an additional earn-out of up to USD100 million subject to performance. The acquisition will be funded via a $825 million equity raising by way of an entitlement offer, $157 million issue of new TWE shares to the existing owners of DAOU, and USD311 million debt through a new acquisition bridge facility.

The context: Australia’s top winemaker said DAOU is the fastest growing luxury wine brand in US trade over the past year and its acquisition would accelerate TWE’s focus on luxury-led portfolio premiumisation. The deal is expected to be earnings per share accretive with cost synergies of over USD20 million in FY25, the first full year of ownership. The deal comes just weeks after Treasury Wine outlined plans to rebuild its business in its top export market China after that country agreed to review tariffs on Australian wine.