KKR, TPG Capital eye Fosters wine business

Rival US private equity firms Kohlberg Kravis Roberts and TPG Capital may join forces to bid for Foster's wine business, Treasury Wine Estates, according to the Australian Financial Review.

Both the private equity firms have held early talks but are yet to decide whether to bid jointly or separately, said the newspaper in its online Dealbook column.

Their offer would need to top the $2.5-billion bid made by Cerberus Capital Management that was rejected by Foster's Group on 7 September on the grounds that the unsolicited offer was undervalued. (See: Foster's rejects $2.5 billion takeover for wine business from unnamed private equity firm)

Citing confidentiality, Foster's had refrained from naming the private equity firm behind the bid for its wine business, but The Australian newspaper reported a day later without saying where it got the information from that the unnamed bidder was Cerberus Capital Management, the private equity firm with over $20 billion assets under management. (See: Cerberus Capital is the unnamed bidder for Foster's: The Australian)

But the unexpected takeover proposal from Cerberus for Foster's newly-branded wine business, Treasury Wine Estates, had put a benchmark price on the business and opened up the possibility of other potential acquirers being lured to both its fledging wine and lucrative beer business in play.

Foster's, Australia's largest brewer and the world's second-largest wine maker by sales, has been subject to takeover speculation as recent as last month and SABMiller plc, one of the world's largest brewers, was reportedly mulling a $10.9-billion acquisition of Carlton and United Breweries (CUB), the beer making arm of Fosters Group Ltd. (See: SABMiller said to be mulling a $10.9 billion bid for Fosters Group)