Shares in Treasury Wine Estate, whose brands include Penfolds, Rosemount and Wolf Blass, soared after Australia’s biggest wine group announced it had successfully raises $AU368 million in a rights issue to institutions.
The cash will help pay for the acquisition of the assets of Diageo Wine for $US552 million ($AU760 million), a deal which gives Treasury a stronger hold on the premium market.
Diageo Wine is a leading player in the US luxury and “masstige” (quality mass appeal) wine market, as the owner of a collection of iconic wine brands based in the Napa Valley, California.
Key US brands to be acquired include Napa Valley’s wineries Beaulieu Vineyards, Sterling Vineyards, Acacia, and Provenance and Hewitt.
The capital raising is a 2-for-15 offer to raise $486 million at $5.60 a share.
CEO Michael Clarke says the company looks forward to completing the retail component of the entitlement offer.
The retail entitlement offer is expected to raise $119 million.
In August, the company announced a return to profit. Statutory net profit for the full year was $77.6 million, an improvement of $178.5 million on the previous $101 million loss.
A short time ago, Treasury Wine shares were up almost 12% to $7.35.