Friday, March 29, 2024

Scales well-positioned for Villa Maria play

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Scales has been canvasing agriculture and horticulture investment options for some time and is well-positioned to venture into winemaking if it buys Villa Maria Estates.
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The NZX-listed agribusiness confirmed it’s participating in the sale process, but warned there’s “no certainty that its participation will result in any transaction,” it said in a statement to NZX.

The Australian Financial Review’s Street Talk column – long-used by investment banks across the Tasman to spruik their wares – reported Scales gazumped rivals with its bid for the winemaker, which had a price tag around A$200 million.

If the deal is inked, Scales may need to raise equity to fund the acquisition, Street Talk reported. The shares were unchanged in early trading today at $4.55, having climbed 32.3% over the past 12 months.

“Scales continues to explore a range of growth opportunities, including acquisitions, and our policy is not to comment on media speculation,” it said.

The agribusiness had a $97.6m war chest at the end of 2020 for growth opportunities, although it talked up its burgeoning pet food business when reporting its annual result in February.

Villa Maria wasn’t immediately available for comment.

The winemaker has been coy about the sale process, pointing to a planned capital review and calling the reports “purely speculative”. The process was initially expected to wrap up by the end of March.

Accolade Wines, which owns the local Mud House Wines brand, had indicated it was keen on kicking the tyres, although local rivals such as Delegat, Booster Wine Group and Foley Wines weren’t as interested.

Other suitors were said to include Constellation Brands and Pernod Ricard.

Villa Maria ended a 10-year exclusive sales partnership with Washington-based winemaker Ste Michelle Wine Estates, signing Winebow Imports as its new exclusive import representative in the US as part of its drive to grow sales in the world’s biggest economy.

BusinessDesk

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