AUSTRALIA – Treasury Wine Estates, a top Australian wine producer, has acquired its rival U.S. winemaker DAOU Vineyards, in a bid to strengthen its presence in the highly competitive U.S. market.
DAOU, founded in 2007 is said to be the most competitive upcoming wine brand in the US market over the past year.
The winery located in Paso Robles, California a variety of wines, including Cabernet Sauvignon, Sauvignon Blanc, Chardonnay, and Rose.
Its most popular wines include Bodyguard, Cabernet Sauvignon Estate, Cabernet Sauvignon Reserve, Eye of the Falcon Reserve, Patrimony, and Soul of a Lion.
According to sources, the proposed deal includes $900 million upfront and an additional up to $100 million in future earn-outs if certain targets are met.
The deal includes the brand, Daou Mountain Estate and hospitality site, four boutique luxury wineries, and approximately 400 acres of vineyards in the Adelaide district of Paso Robles.
The buyout occurs at a time when the owner of the Penfolds and Lindeman’s labels plans to accelerate its focus on luxury wine collection.
The deal will enable Treasury to accelerate this plan of taking its portfolio upmarket, which according to the Australian firm, will facilitate higher demand and margins.
Treasury plans to fund the acquisition through an equity raise of US$525.53 million. Additionally, the winemaker intends to establish US$311 million of debt via a new US$350 million acquisition bridge facility to expedite funding for the acquisition.
Upon completion of the deal, treasury plans on having a US$100 million placement of new company shares issued to the existing owners of DAOU.
Tim Ford, CEO, Treasury Wine Estates said, “The US is the largest wine market, and we are beyond thrilled to add Daou to our portfolio, cementing our position as a global luxury wine leader.
This is a transformative acquisition that accelerates the growth of our luxury portfolio globally and paves way for a new luxury wine business with an outstanding track record for growth.”
Daou founders, Georges and Daniel Daou expressed positivity in the new deal stating, “The last frontier has always been international scale and as part of the Treasury Wine Estates portfolio, we have unlocked the potential to be amongst the highest-end wines for consumers to enjoy globally.”
Treasury’s expansion into the U.S. happens as the winemaker awaits a review recently announced by China into the tariffs that stopped the country from being Treasury’s biggest market.