Herbert Smith Freehills has advised Treasury Wine Estates (TWE) on its US$600 million acquisition of the UK and US assets of Diageo's wine business and the negotiation of a suite of transitional service agreements with Diageo, as well as the A$486 million fully underwritten equity entitlement offer to part fund the acquisition.
The cash payment of US$600 million comprises US$552 million plus the assumption of capitalised leases of US$48 million.
The acquisition of Diageo’s wine operations complements TWE’s established business strategy, and allows the company to replicate its focus on efficiency, investment in marketing and positive transformation.
TWE will acquire the Blossom Hill wine brand in the UK, the second largest wine brand in the UK by volume and value in FY2015. Key US brands to be acquired include well-known brands Beaulieu Vineyards, Sterling Vineyards, Acacia, Provenance and Hewitt, amongst other assets.
The cross-border Herbert Smith Freehills team was jointly led by Melbourne corporate partner Rodd Levy and London corporate partner Greg Mulley. The firm's Melbourne team, led by Rodd Levy and fellow corporate partners Richard Loveridge and Tim McEwen, advised on the equity raising. The firm's London team led by Greg Mulley, advised on the UK acquisition with TMT partner Nick Pantlin leading the advice on transitional service agreements. Other London partners who provided specialist advice included Andre Pretorius (competition), Christine Young (employment) and Isaac Zailer (tax).
Rodd Levy commented:
“We are delighted to have acted for Treasury Wine Estates on this important transaction. This follows a series of significant matters on which we have advised the company in recent years.”
Greg Mulley commented:
"This cross border M&A deal has a number of interesting aspects as a result of there being a mixture of share and asset acquisitions, and a degree of the interdependency for an interim period between the acquired business and that remaining with Diageo, as reflected by the need for multiple transitional services arrangements. This transaction follows a number of major cross-border M&A deals we have advised on this year, including in the drinks sector, and consumer market more generally."
The acquisition is subject to certain regulatory approvals, including anti-trust approval in the US, and is expected to complete in approximately three months.
Farella, Braun & Martell provided US legal advice to TWE and Stibbe was the legal counsel to TWE in the Netherlands. Sheppard Mullin (US) and CMS (London and Netherlands) were legal advisers to Diageo.
