British drinks giant Allied Domecq announced today that it is making a A$143.6 million ($97.3 million) cash takeover bid for Peter Lehmann Wines Limited, in an effort to add an Australian brand to its global wine portfolio.
"We have always felt the [wine] industry is ready for more consolidation," said Stephen Whitehead, director of corporate affairs for Allied Domecq. "We have a range of premium wines from several areas, but the one country we are missing is Australia."
Peter Lehmann Wines, founded in 1979 in Australia's Barossa Valley, produces about 600,000 cases a year. It is best known for its Shiraz and Cabernet Sauvignon bottlings and its Clancy's red blend. It also produces Chardonnay, Riesling, a late-harvest Semillion dessert wine and other varietals. If Allied is successful in its bid, the company said in a statement that it would maintain the "identity and integrity" of the winery.
Allied Domecq already owns 14.5 percent of the issued ordinary shares in Peter Lehmann Wines, making it the largest shareholder, according to a statement issued by the U.K.-based company.
Its initial bid is A$3.85 ($2.61) per share for Peter Lehmann Wines and that offer is conditional on gaining at least a 51 percent stake. However, if Allied Domecq ends up with 90 percent of the issued stock, the company will increase the total value of the offer to A$149.2 million ($101.1 million), or A$4.06 ($2.76) a share.
According to reports in the Australian media, the company's founder, Peter Lehmann, has endorsed an earlier, lower-priced offer made by a rival bidder, the Switzerland-based Hess Group. (Update: On Sept. 23, Hess matched Allied Domecq's A$3.85 per share offer.)
However, Lehmann only owns about 10 percent of the stock in his company, according to Whitehead. "Mr. Lehmann, great man that he is, is no longer the director," Whitehead said. "He is retired." Lehmann's son, Doug, currently heads the company.
Allied Domecq, which also owns numerous spirits brands and quick-service restaurants, has wine holdings around the world. In California, it owns Atlas Peak, Buena Vista, Callaway, Clos du Bois, Mumm Cuvée Napa and William Hill wineries. In Europe, it owns the Champagne brands G.H. Mumm and Perrier-Jouët, Cockburn's Port and the Bodegas & Bebidas wine company in Spain. In the Southern Hemisphere, it controls New Zealand's Montana Wines (which are sold as Brancott Vineyards in the United States) and owns Balbi and Graffigna wineries in Argentina.
In 2001, Allied Domecq was busy snapping up other wine companies; in 2002, it publicly listed its shares on the New York Stock Exchange. But recently, several reports have played down the possibility of future acquisitions, based on speculation that the British beverage conglomerate was under performing and vulnerable to being taken over itself. Whitehead dismissed the reports as "purely speculative," and said the decision to bid for a large Australian producer shows the company's stability.
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