A big thumbs up from investors yesterday after Treasury Wine Estates (TWE) shares were re-listed following its big capital raising to fund the expansion of its US wine operations with the purchase of assets from global grog group, Diageo.
Shares in Treasury jumped by more than 16% at one stage after trading resumed, to a new all time high of $7.52. They closed up 12.6% at $7.40 – a record closing high.
That was after the group announced it had raised $A368m in a rights issue for institutional investors.
Treasury shares had been halted since the announcement last Wednesday that it has agreed to buy Diageo’s wine business for $A760 million.
Key US brands to be acquired include Napa Valley’s wineries Beaulieu Vineyards, Sterling Vineyards, Acacia, and Provenance and Hewitt. Included is the five million case UK best selling wine, Blossom Hill.
The capital raising is a 2-for-15 offer to raise $A486 million at $5.60 a share.
Approximately 89% of entitlements available to institutional investors were taken up, with the retail component to open on October 26.
“We are thrilled with the strong support shown by TWEs shareholders and other institutional investors for both the equity raising and TWEs acquisition of Diageo Wine," TWE chief executive Michael Clarke said yesterday.
The institutional bookbuild was done at $7.10 a share, being the offer price of $5.60 for each new share, plus $1.50 for each entitlement. This was a 9.9% premium to the theoretical ex-rights price of $6.46, but a 30 cents a share discount to yesterday’s closing price.
Mr Clarke said the company looks forward to completing the retail component of the entitlement offer.
The retail entitlement offer is expected to raise $A119 million, and judging by yesterday’s performance, it should attract strong support.
