Treasury gets approval to acquire Diageo’s wine business

Treasury Wine Estates has been given the go-ahead to acquire the majority of Diageo’s wine business after gaining anti-trust approval in the USA.

The US Federal Trade Commission today gave approval of the £361 million sale, which was announced on 14 October. The Australian company’s acquisition of part of Diageo’s wine business was subject to regulatory approval including the US anti-trust approval.

The move will help pave the way for Treasury to add Diageo’s UK wine business, Percy Fox, including wine brands Blossom Hill and Piat d’Or, to its portfolio. It is also buying the Chateaux & Estate Wine business in the US, whose brands include Beaulieu Vineyards, Sterling Vineyards, Acacia, Provenance and Hewitt.

Treasury’s CEO Michael Clarke described the “game-changing” deal as “highly complementary” to the company’s overall strategic goals.

“We remain committed to our strategic roadmap of transitioning our business from an order-taking agricultural company to a brand-led and capital-light, marketing organization,” he said. “This acquisition will transform our US business into a larger player of scale in the attractive Luxury and Masstige segments of the high growth US market,”

Rumours about a possible deal, which is expected to go through on 31 December 2015, first surfaced earlier this year.

Treasury has shown signs of financial improvement in the last 12 months, following several difficult years, in which it halted trading and issue a profit warning in January 2014, following the decision to lower its US wine inventory.

In August it reported net profit of AU$77.6 million after tax, a result $178.5m up on the previous year.