NEW YORK (The Deal) -- Australia's largest wine maker Treasury Wine Estates Ltd. has rejected a A$3.05 billion ($2.83 billion) bid from Kohlberg Kravis Roberts & Co., claiming the offer of A$4.70 per share undervalues its operations.
KKR made the non-binding offer on April 16, prompting confidential talks that ended without an agreement, Treasury Wine on Tuesday, May 20.
"The proposal does not reflect the fundamental value of the company and it is therefore not in the best interests of shareholders," Treasury said. "The board...does not intend to take any further action in relation to the proposal."
KKR's April 16 bid came a week after the Melbourne-based wine maker's new CEO Michael Clarke told analysts "everything is on the table" as he conducted a strategic review aimed at turning around the underperforming business.
That review had been expected to result in an effort to sell Treasury Wine's packaging assets and its underperforming U.S. operations, which last year cost the company A$160 million in writedowns as falling demand left it having to crush thousands of low-cost bottles of wine. Clarke has promised to trim A$35 million of expenses by the end of 2015, but has admitted that the process will likely result in further writedowns.
Treasury produces wine under 51 different brands, ranging from Australia's most sought-after red, Penfolds Grange, to U.S. mass market bottles such as Sledgehammer. The company posted Ebit of A$45.8 million for the six months to Feb. 20, down 39% over the same period a year earlier, on sales of A$812 million, down 0.6%.