Treasury Wine Estates announces acquisition of fastest growing luxury wine brand in the United States, DAOU Vineyards¹

Rhea-AI Summary

Treasury Wine Estates (ASX:TWE) has announced the acquisition of DAOU Vineyards, a luxury wine business, for $900 million upfront and up to $100 million in earn-outs. The deal aims to accelerate TWE's luxury portfolio growth strategy and expand its presence in key markets. DAOU is known for its award-winning Cabernet Sauvignon-based wines and unique consumer experiences. The acquisition will allow TWE to curate a combined luxury portfolio with worldwide expansion potential through its global distribution network and consumer expertise.

Positive

• The acquisition of DAOU Vineyards strengthens Treasury Wine Estates' luxury portfolio.
• DAOU is the fastest-growing luxury wine brand in the U.S. trade over the past year.
• The deal accelerates TWE's focus on a luxury-led portfolio and key growth markets.
• TWE aims to bring the DAOU portfolio and luxury consumer experiences to new international markets.
• The acquisition provides an opportunity for significant value creation through synergies.

Negative

• None.

• DAOU is recognized throughout the industry for its award-winning Cabernet Sauvignon-based PATRIMONY wines, unique consumer profile, and benchmark-setting luxury experiences
• The addition of DAOU accelerates Treasury Wine Estates' premium and luxury portfolio growth strategy in the U.S. and globally, cementing its place as a global leader in luxury wine
• Acquisition generates significant value creation opportunity, building on Treasury Wine Estates' and DAOU's unique strengths to curate a combined luxury portfolio with worldwide expansion potential through Treasury Wine Estates' global distribution network and consumer expertise

NAPA, Calif., Oct. 30, 2023 /PRNewswire/ -- Treasury Wine Estates Ltd (ASX:TWE), one of the world's leading wine companies, today announced that it has reached an agreement to acquire DAOU Vineyards, the acclaimed luxury wine business founded by brothers and co-proprietors Georges and Daniel Daou for an upfront consideration of $900 million, plus an additional earn-out of up to $100 million. This transformative deal will accelerate TWE's focus on a portfolio that is increasingly luxury-led with a greater presence in key growth markets such as the U.S.

Founded in 2007 and based in the U.S. winemaking region of Paso Robles, California, DAOU is the fastest-growing luxury wine brand in the U.S. trade over the past year[2] and is recognized throughout the industry for its award-winning Cabernet Sauvignon-based PATRIMONY wines, unique consumer profile, and benchmark-setting luxury experiences. DAOU's fully integrated digital platform, DAOU+, combines e-commerce and membership with seamless and unique features that increase consumer loyalty.

DAOU is a strong complement to TWE's existing portfolio in upper-luxury price points and fills a key portfolio opportunity for Treasury Americas in the $20-40 range, as well as strengthens its luxury portfolio in the $40+ range. Utilizing TWE's global marketing and distribution expertise, the company's long-term vision is to bring the exceptional DAOU portfolio, winemaking philosophy and unique luxury consumer experiences to new international markets. TWE will also explore sourcing opportunities outside the U.S. for DAOU, as part of its global sourcing strategy.

Leadership Commentary

Tim Ford, CEO, Treasury Wine Estates said: "The U.S. is the world's largest wine market and we're beyond thrilled to add DAOU to our portfolio, cementing our position as a global luxury wine leader. This is a transformative acquisition that will accelerate the growth of our luxury portfolio globally and paves the way for new luxury consumer experiences. DAOU is an award-winning luxury wine business with an outstanding track record for growth and we have grand plans for DAOU to become the next brand with the international scale and luxury credentials of Penfolds. With DAOU, we will be well-positioned to connect with a new generation of wine lovers, combining tradition with innovation, culture-led experiences, and global distribution."

Ben Dollard, President, Treasury Americas said: "We're really excited about the opportunity for the wine category to engage new consumers, and particularly to bring consumers into our portfolio. DAOU has done an incredible job with regards to the experience at DAOU Mountain as well as engaging with younger wine consumers across the country, and we see very significant opportunity to take that experience globally."

Georges and Daniel Daou, Founders of DAOU said: "The last frontier has always been international, and as part of the Treasury Wine Estates portfolio, we have unlocked the potential to be amongst the highest-end wines for consumers to enjoy globally. In Treasury Wine Estates, we have found a partner that not only understands the value of our brand and the premium assets we have cultivated but also the importance of ensuring that we maintain a relentless focus on quality and craftsmanship as we step into our future. Both companies are change leaders and by joining forces, we will continue to boldly disrupt the industry and bring the very best in wine and luxury experiences to consumers around the world."

Other Transaction Details

The acquisition, which is expected to be completed by the end of CY2023 (subject to U.S. anti-trust approval), includes the DAOU brand, DAOU Mountain Estate and hospitality site, four boutique luxury wineries and around 400 acres of vineyards in the coveted Adelaida District of Paso Robles.

Georges and Daniel Daou will remain engaged and highly involved in the business: Georges as Founder and Daniel as Founder and DAOU Chief Winemaker.

TWE's financial advisor for this transaction is PJT Partners and its legal advisor is Davis Wright Tremaine. DAOU's financial advisor is Centerview Partners LLC and its legal advisor is Sheppard Mullin.

*Note: All currency figures are $USD.

Media Teleconference Details & Assets

DATE:	Monday 30 October 2023
TIME:	5:30 PM ET
WHAT:	Treasury Wine Estates will host a media teleconference for media to ask questions regarding the U.S. acquisition announcement.
WHO:	•     Treasury Wine Estates CEO Tim Ford •     Treasury Americas President Ben Dollard
DIAL IN DETAILS:	Link to register and join audio webcast: https://s1.c-conf.com/diamondpass/10034646-rkubj0.html
NOTE:	This is the main opportunity for media to ask questions of Tim and Ben.
MEDIA CONTACTS:	Lily Lane at lily.lane@tweglobal.com / 707.363.4146 or Brunswick Group at twemedia@brunswickgroup.com
MEDIA ASSETS:	Images and b-roll are available for download from here.

About Treasury Wine Estates

Treasury Wine Estates (TWE) is one of the world's leading wine companies, and is listed on the Australian Securities Exchange. TWE's global, multi-regional sourcing model includes world class vineyard and production assets in internationally acclaimed winemaking regions including Barossa Valley and Coonawarra in Australia, Napa Valley in the United States, Marlborough in New Zealand, Bordeaux in France, and Tuscany in Italy. The company has a strong focus on sustainability and building a brighter future for everyone who touches the business. TWE's global portfolio is available in more than 70 countries and includes luxury and premium brands such as Penfolds, 19 Crimes, Pepperjack, Squealing Pig, Wynns, Matua, Beaulieu Vineyard, and Frank Family Vineyards. The company employs a global team of approximately 2,500 people, with its culture best expressed by the 'TWE DNA' – enabling team members to be courageous, celebrate unique differences, and deliver together. For more information, please visit www.tweglobal.com.

About Treasury Americas

With its U.S. headquarters in Napa, California, Treasury Americas, is one of the largest Napa Valley growers, producing luxury grapes in 10 Napa American Viticultural Areas (AVAs) and supplying the strongest luxury portfolio of iconic American brands, such as Beaulieu Vineyards, Beringer Vineyards, Etude Winery, Frank Family Vineyards, and Stags' Leap Winery that have been awarded more than 2,000 scores of 90+ from respected wine critics globally. With beloved wineries in California's most celebrated wine regions, Treasury Americas takes a comprehensive approach to sustainability. Recognized as the California Green Medal Leader, #1 Healthiest Employer in the Bay Area and a top Healthiest Employer nationally, Treasury Americas' commitment to supporting a prosperous future for winegrowing is clear.

About DAOU Vineyards

DAOU Vineyards is committed to producing collectible, world-class wines to rival the most respected appellations in the world. Situated on a 212-acre hilltop estate in the Adelaida District of Paso Robles, DAOU was founded by brothers Georges and Daniel Daou in 2007 to develop the potential of Cabernet Sauvignon and other Bordeaux varieties in the region. The family estate at DAOU Mountain combines remarkable geology, favorable microclimate, and high elevation, once described by renowned California winemaker André Tchelistcheff as "a jewel of ecological elements." As a steward of this beautiful terroir, winemaker Daniel Daou offers a quality-focused range of complex but accessible wines that are a pleasure to drink. For more information, please visit www.daouvineyards.com.

¹ Circana Market Advantage, Total US MULO+C, US$20+, Value, 52 weeks ending 10 September 2023
² Circana Market Advantage, Total US MULO+C, US$20+, Value, 52 weeks ending 10 September 2023

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SOURCE Treasury Wine Estates

FAQ

What is the upfront consideration for the acquisition of DAOU Vineyards?

The upfront consideration for the acquisition is $900 million.

What is the additional earn-out for the acquisition?

The additional earn-out for the acquisition is up to $100 million.

Where is DAOU Vineyards based?

DAOU Vineyards is based in Paso Robles, California.

What is DAOU Vineyards known for?

DAOU Vineyards is known for its award-winning Cabernet Sauvignon-based wines and unique consumer experiences.

What is TWE's long-term vision for DAOU Vineyards?

TWE's long-term vision is to bring the DAOU portfolio, winemaking philosophy, and unique luxury consumer experiences to new international markets.