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Private equity firms circle Treasury

The Age logo The Age 22/05/2014 Eli Greenblat
What a difference nine months makes: Treasury chief Michael Clarke advised KKR on another deal last year. What a difference nine months makes: Treasury chief Michael Clarke advised KKR on another deal last year.

Treasury Wine Estates is attracting interest from other private equity players following Tuesday's revelation about a $3.1 billion takeover bid from Kohlberg Kravis Roberts, with chief Michael Clarke's plans for turning around the troubled winemaker already winning early support from potential bidders.

Mr Clarke is particularly well known to the New York-based KKR who hired him only nine months ago to help advise on a £1.5 billion ($2.75 billion) bid for drinks brands Lucozade and Ribena, owned at the time by GlaxoSmithKline.

Far from throwing slings and arrows at each other from behind their battlements, relations between Mr Clarke and KKR remain cordial, insiders said, and it is believed if the iconic US private equity firm eventually grabs control of Treasury Wine they will keep Mr Clarke on to run the business for them and endorse his strategy to resuscitate the winemaker's earnings.

Mr Clarke is well known within private equity circles. Since stepping down from running British food giant Premier Foods Plc in June last year has worked with a string of private equity firms including KKR which is now circling Treasury Wine after approaching the board in April with an offer of $4.70 per share.

He is credited for turning around consumer goods company Kraft fortunes in Europe, and in particular has a track record for hacking away at costs - something which private equity gets very excited about.

Helping to entice KKR, and other private equity firms, to throw a bid on the table is Mr Clarke's previous work with the close-knit global private equity firm industry who see merit in his initial plans - also revealed this week - to slash costs by $35 million at Treasury Wine and pump the savings into a 50 per cent boost on brand marketing.

Shares in Treasury Wine have rallied nearly 25 per cent since KKR's bid was made public, signalling investors are expecting a better bid from the US fund or for another player to soon join the auction with a price set at least above $5 per share.

Treasury Wine was slightly weaker in afternoon trade today, down 7¢ at $5.

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