Casella receives a ‘number of approaches’ for wine brands

The owner of Yellow Tail and Peter Lehmann, Casella Family Brands, has stated that it has received a “number of approaches” for its wine brands, but has denied reports that it is mulling a AU$500 million-plus sale.

In its ‘street talk’ section, The Australian Financial Review published an article which stated that Casella had hired investment bank UBS to gauge the market for its wine brands. It noted that while no official sale process had begun and no documents had been sent out to interested parties, the company wanted to see if there was demand for its wine brands among Australian and overseas private equity companies.

The news site reported that Casella was mulling the sale of its entire wine business, with buyers told it was worth around $500m, based on other high-profile sales, such as Accolade Wines for $1 billion.

However, in a statement published today, Casella Family said that it “had not commenced a sale process for the business.”

“There has been strong interest in the sector, driven by the recent sale of Accolade Wines and the rumoured sale of the Pernod Ricard Wine assets, and Casella Family Brands has received a number of approaches over an extended period of time from a range of investors in relation to the Casella Family Brands business,” the company said.

“The company will continue to invest in the growth of its portfolio of brands including [yellow tail], Peter Lehmann Wines, Brand’s Laira, Morris Wines of Rutherglen and Baileys of Glenrowan.”

the drinks business has contacted Casella for further comment.

Casella Wines generated $473.5 million in revenue, with a profit of $31.1m after tax, in the year to the 30 June, according to the AFR. For the same period in the UK, total volumes grew 23.9% and revenue increased 22.2%, with operating profit rising from £2.8m (year ending 30 June 2017) to £3.4 million of 2018. FY2018 all saw the company move its Yellow Tail bottling from Europe to the UK. However, the company’s overall global profits decreased by almost half in the 2018 financial year, according to the AFR.

In 2017, the company restructured in order to ensure it remained in family hands, with the control of the company passed to the three sons of founders Fillippo Casella, who died in 2009, and his wife Maria Casella, who died in 2014. A share buyback agreement at the time valued the business at AUS$1.5 billion.

Rumours began circulating in March 2019 that Pernod Ricard was mulling the sale of its wine division, which includes brands such as Campo Viejo and Jacob’s Creek. Reports claimed the company was in “early discussions” on a potential sale of the $500 million division. Analysts however were skeptical, arguing that while there may be further sales of non-core brands, a wholesale disposal of the entire wine division is “unlikely”.

Meanwhile, Constellation Brands is in the process of offloading US$1.7 billion of wine brands to E&J Gallo, in a deal which, subject to approval, i expected to close at the end of the first quarter of the 2020 financial year.

In April last year, Australia’s Accolade Wines, which owns brands such as Hardys and Banrock Station, was bought by US private equity firm the Carlyle Group for AU$1 billion (£548 million).