AUSTRALIA'S largest wine company could soon be in foreign hands.The Australian reports with institutional investors are predicting Treasury Wine Estates - owner of some of the country's most famous wine labels - is ripe for a takeover offer with a potential bidding war netting up to $4.2 billion.
And while global wine players would undoubtedly be interested in TWE's portfolio of premium labels, including Penfolds, investors from China - the world's fastest-growing wine market - are likely to lead the charge.
TWE was approached by US private equity firm Cerberus Capital in September 2010, before it had even been demerged from its former parent, brewing major Foster's.
China's Bright Food was also rumoured to have made an approach in 2011, just months after the spin-off from Foster's had been completed.
But with the wine sector on the edge of a major recovery as global oversupply disappears and Chinese demand continues to surge, speculation is rife that a serious bidder for TWE will soon emerge.
"Whether it's the next three months or the next three years, ultimately with that stable of brands, they'll be attractive to a global player or the Chinese," said Perpetual fund manager Matt Williams, whose company is TWE's fourth-largest shareholder, with a 5.1 per cent stake.
"The market has recognised this also - TWE is not trading cheaply at over 20 times consensus earnings, so the market is not going to let it go for a song if a financial buyer turns up."
Shares in TWE have risen as much as 67 per cent in the 19 months since the demerger, climbing from a debut price of $3.36 in May 2011 to a peak of $5.60 in September last year.
The stock has since lost some ground after warning in October that a slow start to the financial year would cut first-half earnings by up to 20 per cent, and closed at $4.71 on Friday, giving TWE a market capitalisation of $3.05bn.
Macquarie analyst Greg Dring has said TWE's share price indicates the market expects "either a significant lift in earnings and/or a takeover" and has valued the company as high as $4.2bn in the event it hives off Penfolds into a separate company as part of a takeover defence.
The Chinese are certainly out there, having snapped up the Gemtree and Stonehaven wineries in South Australia and Ferngrove in Western Australia in the past 18 months.
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