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Companies

Bright Food may want to purchase vintner

(China Daily)
Updated: 2011-07-05 13:52
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Melbourne, Australia/SHANGHAI - Treasury Wine Estates Ltd rose by a record in Sydney trading as two people familiar with the matter said China's Bright Food Group Co is considering making an offer for the world's second-largest winemaker.

The vintner surged as much as 11 percent, the largest intraday gain since Treasury shares began trading on May 11. Closely held Bright Food, Shanghai's biggest food and dairy producer, has had internal talks about a bid for the Melbourne-based maker of Penfolds Grange, said the people, who asked not to be identified because the discussions are private.

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Bright Food's potential interest in Treasury follows a failed offer for 50 percent of French yogurt maker Yoplait SA and being outbid by Wilmar International Ltd for CSR Ltd's sugar unit. Foster's Group Ltd, which spun off Treasury in May, last month rejected a A$9.5 billion ($10.2 billion) takeover offer for the brewing business from SABMiller Plc as too low.

"After a few failed attempts in recent months, understanding of the regulatory and business environment as well as management skill is the key for them to succeed this time," said Wu Zhengwu, an analyst at AJ Securities Co in Shanghai.

"It is a right approach for Bright Food to make overseas acquisitions if it aims to become a global food company."

Treasury, with brands including Lindemans and Beringer, noted the report of talks at Bright Food and said it has no other unannounced information to explain the share-price gains, according to a stock exchange filing.

Rebecca Smith, a spokeswoman for Treasury, declined to comment beyond the statement. Bright Food is considering Australian wine assets for acquisition, Pan Jianjun, a Shanghai-based spokesman, said on July 1.

Treasury is Australia's largest winemaker and ranks behind only Constellation Brands Inc in global wine sales. Foster's spun it off after more than A$2.5 billion of writedowns triggered by a glut of grapes and gains in the Australian dollar that slashed earnings.

Foster's rejected an offer worth as much as A$2.7 billion from an unidentified buyout firm for the wine unit in September, saying it "significantly" undervalued the business.

"Any potential buyer has to go in for the long term, as in five years and beyond," said Theo Maas, who helps manage A$5.4 at Arnhem Investment Management in Sydney. "The two big macro drivers for Treasury, in the currency and wine market itself, haven't improved."

Bright Food may raise as much as 6 billion yuan ($928 million) this year selling bonds and listing a unit to fund acquisitions and boost production capacity, Chairman Wang Zongnan said in an interview on April 1.

Bloomberg News

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