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Watch on -Australia's Treasury Wine Estates, the world's biggest standalone winemaker, agreed to a $900 million buyout of California's DAOU Vineyards, locking in a strategy of selling higher-margin luxury products amid uncertainty about trade with China.
The wine producer has been resetting its strategy in an attempt to diversify outside of China, which used to contribute a third of its profits, after Beijing imposed tariffs on Australian wine in 2021 when Canberra called for an inquiry into the origins of COVID-19. DAOU fills a key Treasury Americas portfolio gap at the $20 to $40 per bottle range and strengthens the existing luxury portfolio above $40 per bottle, the Australian company said.
"On face value the acquisition rationale is solid, and financial metrics look attractive....the concern investors will have is that TWE Americas has been underperforming in recent times with the Frank Family Vineyard acquisition driving the earnings," E&P Capital retail analyst Phillip Kimber said in a note.
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