TPG's $3.1 billion move for Australia's Treasury Wine sets up clash with rival KKR

SYDNEY/HONG KONG (Reuters) - Private equity giant TPG Capital Management LP made a $3.1 billion approach for Australia's Treasury Wine Estates Ltd , a source said, setting the scene for a possible bid war for the world's No.2 winemaker with rival KKR & Co .

A week after KKR and Rhone Capital LLC proposed a A$5.20 a share offer for Treasury, the owner of the Penfolds, Lindemans and Wolf Blass brands said on Monday it received a second identical unsolicited approach from a global private equity firm which requested anonymity. [ID:nL4N0QA2RU]

At 0200 GMT, Treasury shares were trading at A$5.255, valuing the company at A$3.4 billion, with investors bidding the stock up 2.4 percent on the prospect that a takeover battle might ensure.

 

The buyout firm behind the second proposal was TPG [TPG.UL], said the source, who had direct knowledge of the matter but could not be identified as the discussions were confidential. Treasury declined to comment further on the second bidder's identity.

TPG has already started due diligence on Treasury after reaching a decision to make an approach over the weekend, the source added.

Treasury has been viewed as ripe for a takeover since late 2013 when it warned of massive writedowns, citing problems in U.S. operations and sliding China sales.

In a statement on Monday, Treasury said it will offer the second suitor time to undertake due diligence exercises to progress with its bid, which values the company at A$3.377 billion ($3.13 billion). A Treasury spokesman told Reuters the second suitor made its approach over the weekend and asked not to be named.

Goldman Sachs , which is advising Treasury, declined to comment.

Last week, KKR and Rhone offered the same amount for Melbourne-based Treasury, spun off from brewer Foster's in 2011, after the target rejected a A$4.70 per share bid from KKR earlier this year.

Treasury said last week it would allow KKR and Rhone access to its books for due diligence following their higher offer. That effectively ended its previous stance that its best option for the future was an efficiency drive under new chief executive officer Mike Clarke.

Investors in Sydney had previously speculated on whether leading trade players, like China's Bright Food Group Co Ltd [SHMNGA.UL], France's Pernod Ricard and the world's biggest wine maker, U.S.-based Constellation Brands Inc , could be potential buyers for Treasury.

While the two proposals are identical, Treasury is allowing both rivals to do due diligence simultaneously in the hope of speeding up the process. CEO Clarke is keen to have the matter resolved quickly so it isn't a distraction, the spokesman said.

The company is scheduled to release full-year results on Aug. 21 that are expected to highlight the impact of oversupply in its U.S. operations and dwindling China sales because of a government crackdown on luxury gifts, as well as early effects of Clarke's efforts to turn the firm around.

(1 US dollar = 1.0781 Australian dollar)

(Reporting by Lincoln Feast and Byron Kaye in SYDNEY and Denny Thomas and Stephen Aldred in HONG KONG; Editing by Kenneth Maxwell)