Private equity bidders line up wine offer for Foster's

11 April 2012

Private equity firms Kohlberg Kravis Roberts and TPG have held talks about teaming up to bid for the wine unit of Foster's, reports said today.

The pair are deciding whether to proceed together or separately for the section of the Australian brewer, which includes the Penfold's and Wolf Blass labels, the New York Times said in its online Dealbook.

KKR and TPG united in 2007 to take Texas-based Energy Future Holdings, formerly TXU, private in the largest ever leveraged buy-out.

Foster's rejected a private equity offer this month worth up to $2.5 billion for its underperforming wine business, saying the bid was too cheap. It did not identify the name of the bidder.

The group wants to continue with plans to separate its beer and wine businesses after spending A$7 billion (£4.2 billion) buying wine assets at the top of the market.

The wine business, rebranded as Treasury Wine Estates, is seen as attractive to buyout firms because of depressed earnings at the weak point of the wine-making cycle, and strong brands.

TPG had held about 55% of Beringer with some partners when it sold to Foster's in 2000.

Last year KKR bought the South Korean subsidiary of Oriental Brewery from Anheuser-Busch InBev.