Carlyle Group to Buy Accolade Wines Ltd for $772 Million

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Carlyle Group

American private equity firm The Carlyle Group is buying Accolade Wines (the largest wine producer in Australia) for $772 million. The deal was announced on Thursday and comes at a time when the Australian wine sector is booming as a result of swelling exports to the Chinese market that grew by 68% to $650 million in last year.

Australian group CHAMP Private Equity is the majority owner of Accolade Wines with 80% stake in the company. The remaining 20% is owned by Constellation Brands, another Australian winemaker.

The $772 million figure is more than three time what was paid by the majority owner of Accolade Wines to form the company after buying 80% of Constellation Brands’ operations in Australia, along with some South African and UK labels, for $222 million in 2011.

Constellation Brands had just announced a loss of $3 million in its quarterly operations for its European and Australian wine segments when Accolade was formed by CHAMP seven years ago.

Accolade manufactures some of the most popular wine brands in Australia such as Petaluma, Hardy’s, Echo Falls, Kumala, Babycham, Banrock Station and Stone’s Ginger Wine. CHAMP in a statement on Thursday, said that Accolade Wines was an “export-driven platform that is geared towards taking control of the Asian market, and generating over $260 million in annual exports.”

Exports of Australian wines to China reached $650m US dollars last year, having grown significantly since the two countries signed a trade deal in 2015 that cut down duty on Australian wines to China to about three percent.

The growth of Accolade Wines has also accelerated in the last few years due to strong demand for wine in China, where a majority of the growing middle classes in the country are increasing developing a taste for wine.

Carlyle released a statement on Thursday saying that Accolade is a firm with strong market positions and great brands. The statement went on to say that Accolade has multiple opportunities of growth, more so in Asian markets.

CHAMP previously planned a floatation of Accolade Wines, but abandoned the plans after the Brexit Vote in the UK, and instead decided to amplify its Asian operations. The deal corresponds with the price CHAMP is thought to have been seeking for Accolade when it started considering a possible initial public offer last year.

The Carlyle Group, which is based in Washington, expects to take on the mushrooming Asian market once the deal is closed. Carlyle is a multinational asset management business with a valuation of $195 billion. The company was established in 1987 and currently operates over 31 international offices.

Sources

https://www.marketwatch.com/story/carlyle-group-buys-australias-accolade-wines-for-772-million-2018-04-04

https://www.ft.com/content/a0cca3b8-3887-11e8-8b98-2f31af407cc8

https://www.reuters.com/article/us-accolade-m-a-carlyle-group/carlyle-splashes-770-million-on-australian-winemaker-with-eye-on-china-idUSKCN1HB368

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