A takeover battle has broken out for Treasury Wine Estates, the maker of Penfolds Grange.
The company’s board are unwilling takeover targets, but confirmed on Monday that they had received a second private equity proposal, matching last week’s $3.4 billion offer from US-based KKR and Rhone Capital.
Both potential bidders have been given access to the wine maker’s books to conduct due diligence.
The proposals are not binding and there is no certainty of an official offer being lodged, Treasury Wine said.
The new bidder does not yet want to be identified, but various reports citing market sources said it was US buyout firm TPG Capital.
Treasury Wine shares leapt to a 13-month high, adding 20 cents, or 3.9 per cent, to $5.33.
That compares to the bidders’ $5.20 per share proposals.
The popularity of Treasury Wine, which also owns Wolf Blass and Lindeman’s, comes despite its financial struggles since being spun out of the Foster’s brewing group in 2011.
It took an embarrassing $160 million in writedowns in 2013, due to an oversupply in the US that saw $33 million worth of wine destroyed.
Another $260 million impairment charge has been flagged this year as new chief executive Michael Clarke implements his strategy to turn the company around.
That includes major changes to its global business, which Mr Clarke has indicated is more important to the board than takeover opportunities.
Analysts value the share price at about $5.25, and believe a bidding war would increase the offer price, and the chances of shareholders accepting a change of control.
“It’s becoming very, very apparent that soon it will be out of the board’s hands if all of a sudden it becomes compelling and is a premium,” IG market strategist Evan Lucas said.
“Shareholders will start going `we want to take this, we believe that is fair value.”
Morningstar analyst Daniel Mueller speculated that the company could be broken up if it falls into private hands.
“The industry has had a pretty challenging decade for a number of reasons and whether private equity thinks there’s a more long-term cyclical change in the winds, I’m not sure,” he said.
Treasury Wine was still regarded as a premier wine producer, with low cost horticultural assets that might appeal to college endowment, pension or sovereign wealth funds, he said.
Private equity firms traditionally buy underperforming public companies to restructure and turn them around and before returning them to public hands.