Treasury Wine Estates completes shortfall bookbuild for DAOU takeover

The news: Penfolds owner Treasury Wine Estates is a step closer to its buyout of US luxury winemaker DAOU after raising its targeted $825 million through an entitlement offer. TWE announced the completion of its retail shortfall bookbuild on Wednesday morning.

The numbers: The shortfall bookbuild did not clear the offer price of $10.80 per new share, and roughly 16 million shares will be issued to the sub-underwriters of the retail entitlement offer. Treasury is buying Californian winemaker Daou for USD900 million ($1.4 billion), which it will fund through the $825 million entitlement offer, a $157 million share placement to Daou's owners and USD311 million in debt.

The context: The takeover represents the next step in Treasury's strategy for a more exclusive focus on luxury brands as it divests holdings in the decreasingly profitable bulk and budget wine sector.

What they said: "We thank all shareholders who participated in the entitlement offer to support the acquisition of DAOU Vineyards. We now look forward to completion and bringing our two businesses together, accelerating our focus on luxury-led portfolio premiumisation and establishing Treasury Americas as a leading and iconic US luxury wine business," TWE chief executive officer Tim Ford said in a statement.