Treasury Wine may age better in private cellar

Treasury Wine Estates

09/06/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Antony Currie

    MELBOURNE, June 9 (Reuters Breakingviews) - If Sam Fischer poured himself a large glass of Patrimony Cabernet Sauvignon from his company's own Daou vineyard last Thursday evening, he deserved it. The Treasury Wine Estates TWE.AX CEO had just finished his first investor day, and shareholders liked the bouquet of his overhaul plan enough to push the stock up 13%. Yet the A$3.8 billion ($2.7 billion) Australian vintner's market value still languishes around 25% below where it stood when Fischer took control in October and has fallen 64% over the past two years. Taking the company private would give the turnaround room to breathe.
It's surprising that neither buyout shops nor mainstream activist investors seem to have stopped by for a tasting. In their place, erstwhile Treasury Wine executive Robert Foye is publicly pushing his old employer to up its game but has a stake of just A$1 million.
Nonetheless, he can perhaps claim to have had some influence. He argues the company's sub-7 times EBIT multiple means it trades like a commodity winemaker, despite owning premium offerings like Daou and Penfolds which, managed right, ought to command a more than 10 times multiple. Fischer's five-year plan involves increasing investment in these two and a few others while more than halving Treasury's other 76 brands.
Trouble is, Treasury's previous missteps have eroded investor confidence. Those include getting caught out by cheap wine gluts in the U.S. several times in the past decade or so, taking a A$700 million impairment on its American business last December, and only partially resolving pricing and excess inventory problems in China. On top of that, people are in general drinking less alcohol. One analyst on Thursday reminded executives their new 25% EBIT margin goal rehashes a 2021 target that was never met.
Such problems ought to entice private equity players, plenty of whom have recently either set up Down Under, like EQT EQTAB.ST and CVC CVC.AS, or have expanded, as Blackstone BX.N has done, in part because geopolitics have made investing in China more difficult. Gulping up Treasury Wine would allow them to get exposure to the People's Republic as well as to the U.S. and Australia. 
Buying it would require downing a fair bit of leverage. Assume a 40% premium—roughly what KKR KKR.N offered for the company without success in 2014—and a 50% equity check and debt would equal around 7 times forward EBITDA, including the 2.9 times already on the company's books. But managed well, Treasury's prospects of maturing into a premium winemaker look better in a private cellar.
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CONTEXT NEWS 
Treasury Wine Estates CEO Sam Fischer on June 4 said the company would more than halve its brands to less than 30 from 76 over the next five years and focus on premium and top-selling products. Some brands will be wound down, while others may be sold.

    The news, unveiled at its investor day in Sydney, is part of a broader plan to turn around the company's fortunes.
  

    The company is also conducting a strategic review of its U.S. business, which could result in the sale of some assets, and overhauling its supply chain. 
    It's also planning to cut annual expenses by A$100 million ($71.29 million) over the next three years and reduce its leverage to 2 times EBITDA from the current 2.9 times.
  

    Shares closed up more than 13% on June 4.
  

Treasury Wine's stock has a bad hangover https://www.reuters.com/graphics/BRV-BRV/zdvxglglapx/chart.png
(Editing by Hudson Lockett; Production by Ujjaini Dutta)
((For previous columns by the author, Reuters customers can click on CURRIE/antony.currie@thomsonreuters.com))