Treasury Wine shares plunge as takeover raising confirmed

The news: Shares in Penfolds owner Treasury Wine Estates tumbled more than 8%, after the group completed the institutional component of its entitlement offer to support its acquisition of Californian luxury wine brand DAOU Vineyards.

The numbers: Treasury has agreed to pay USD900 million ($1.4 billion) for Daou. The acquisition will be funded with a $825 million entitlement offer equity raising, a $157 million share placement to Daou's owners and USD311 million in debt. Treasury announced the completion of the entitlement offer's institutional side today. Its shares were trading 8.8% lower at $11.035 at 12:45pm AEDT.

The context: While the Daou takeover has broad shareholder support, the Australian Financial Review reports the deal faces some scrutiny from analysts, who have questioned the timing and US market focus.

What they said: "We are very pleased with, and appreciative of, the level of institutional shareholder support we have received for both the equity raising and the Acquisition of DAOU Vineyards," Treasury chief executive Tim Ford said in a statement.