Like all spinoffs, Treasury Wine Estates(TSRYF) was in high spirits following its spinoff from Fosters. The company’s results have been disappointing however, marked by troubles in its US division culminating in the destruction of millions of dollars worth of completed wine. CEO David Dearle was ousted, replaced by Michael Clarke. Amidst problems spreading to other regions, some analysts called on the company to spin off its premium brands into a separate company.
Today, Treasury Wine investors have something to cheer about. The company publicly rejected, and simultaneously disclosed, a $2.85 billion takeover bid by KKR(KKR). The offer, at 15% above Monday’s close, sent shares soaring, though they are still well below their post-spinoff highs. But, as the Wall Street Journal cautions, the company is taking a big risk by rejecting what might be its last chance to salvage value for shareholders.
Many spinoffs are predicated on the idea that a new focus can turn around a struggling business. However, as has emerged here, not all businesses turn.
Disclosure: The author holds no position in any stock mentioned.