The analysts said that would make it difficult for the KKR team to generate even half of the typical 20 per cent annual rate of return demanded by private equity investors. “The increased bid price appears fair to us,” the analysts wrote in a note to clients. “Treasury’s earnings are depressed by short-term challenges and management’s vision for the future, including potential acquisitions, is compelling — however, given the risks inherent in the wine industry we doubt shareholders will have enough conviction to reject the higher bid.
Market sources said fellow wine giants Pernod Ricard and Constellation Brands, both of which denied reports of interest in TWE earlier this year, were also unlikely to make an offer. “It’s not like these sort of assets come up all the time, so you couldn’t say never, but it’s a big price and those two both have their hands full with their existing brands,” said one analyst who declined to be named.
Read more here: Business Spectator