Takeover bid for SA wines heavyweight

“Acute” financial pressures on the company which owns a range of premier South Australian wine brands has prompted a takeover bid from a consortium of investment firms.

Feb 02, 2024, updated Feb 02, 2024
Accolade Wines owns SA brands including Hardy's, Petaluma, Banrock Station and St Hallett's. Photo: Hardy's.

Accolade Wines owns SA brands including Hardy's, Petaluma, Banrock Station and St Hallett's. Photo: Hardy's.

Accolade Wines this morning announced that the investors planned to take full equity ownership of the company, which owns prominent South Australian wine brands including Hardy’s, Petaluma, Banrock Station, St Hallett and Croser.

The proposed deal, subject to “certain closing conditions” and regulatory approvals, is part of a recapitalisation plan that will reduce Accolade’s total interest-bearing debt.

Under the plan, Australian Wine Holdco Limited (AWL) – a consortium comprised of institutional investors – will take full equity ownership of Accolade, resulting in a change of control from existing shareholders. The price to be paid for the equity was not disclosed by either party.

Accolade – one of the world’s largest wine businesses that dates back to 1836 – said the plan would “not result in any immediate changes to Accolade’s operations, employee numbers or relationships with customers and suppliers”.

AWL comprises funds backed by existing Accolade financial partners Bain Capital Special Situations, Intermediate Capital Group, Capital Four, Sona Asset Management and Samuel Terry Asset Management.

“The recapitalisation plan, which is expected to be completed by mid-year, will result in a substantial reduction in Accolade’s total senior interest-bearing debt,” Accolade said.

“A corresponding reduction in annual interest expense and additional funding from each of AWL’s investors will provide greater operational flexibility in the growth of the business for the benefit of stakeholders.”

Accolade CEO Robert Foye said the company had been “hit by a number of challenging macro-economic and industry headwinds in recent years”, with the news following the release of Wine Australia’s latest Export Report earlier this week, detailing the value of Australian wine exports had fallen for the fourth year running in 2023.

“This agreement is great news for Accolade, our customers, our suppliers and our people,” Foye said.

“Despite our strong stable of brands and leadership positions in key markets, as well as operational measures taken to strengthen the business, our ability to respond to these challenges and grow has been hampered by an unsustainable balance sheet.

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“With this recapitalisation and the support of our new shareholders, we will be ideally positioned to take advantage of the significant opportunities to meet customer demand and grow sales around the world.”

AWL described Accolade’s financial situation as “acute”, “driven by numerous economic factors including a structural downturn in wine demand, cost inflation, excess grape supply given historical arrangements, and elevated debt levels”.

It said the agreement was “an important first step in a process to stabilise the business”, with the recapitalisation plan to be implemented by mid-year “allowing time for regulatory approvals, satisfaction of other conditions, and implementation of new procurement arrangements with certain key suppliers”.

“Renegotiations with those suppliers are underway, led by Accolade’s management team, and good progress has been made to date by all parties,” AWL said.

An AWL spokesperson said the wine business had a “long, proud Australian history as a world-class wine producer and we hope it will remain so for many decades to come”.

“We hope this restructure, if implemented, will help build a more secure long-term future of the business,” the spokesperson said.

“We will be working with and supporting Accolade’s management to focus on operations and stakeholders.

“We recognise Accolade Wines’ South Australian operations will be crucial to the success of the company and understand the important role the company plays in the local grape growing industry, and the broader South Australian economy. We are committed to working with Accolade’s business partners of growers and customers to rebuild a sustainable business.”

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