US billionaire savours blending

CATHERINE HARRIS
Last updated 05:00 22/05/2012

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Any thoughts that American insurance billionaire Bill Foley was just in New Zealand for the scenery have been banished with news of another prospective winery acquisition and sharemarket listing.

Foley, who owns Wairarapa luxury lodge Wharekauhau and a string of Californian wineries, is named as a possible merger partner for New Zealand Wine Company in a statement to the NZX.

NZ Wine Company owns the Grove Mill and Sanctuary labels, while Foley owns several Marlborough wineries and Martinborough's Te Kairanga through his subsidiary, Foley Family Wines New Zealand.

His New Zealand chief executive, Mark Turnbull, said the move was consistent with Foley's desire to have a listed company in New Zealand, "and this is a really key step along that road".

New Zealand Wine Company ran a loss in its December half and its chairman, Alton Jamieson, said the company had been actively seeking a capital restructure to reduce at least $5m in bank debt.

A merger with Foley was still under due diligence and required the approval of its 400-odd shareholders, as well as Overseas Investment Office and NZX Takeovers Panel consent.

"The earliest that this process could occur would be late June," he said.

Should it go ahead, the new entity would fold the bigger Foley Family Wines into NWC – essentially a reverse listing on the NZX alternative market.

Jamieson said such a merger would produce more than 600,000 cases a year, more than doubling Foley's output and taking him closer to his goal of a million cases.

"We've said ourselves in the past that we believe you need to be 500,000 to a million cases in terms of scale and a merger of our two companies would put us in the middle there somewhere."

Shares in New Zealand Wine Company were trading unchanged at 90c, having ranged between $1.45 and 60c during the last year.

The company is valued at about $8 million and owns 250 acres in Marlborough. The Foley portfolio in Marlborough includes Clifford Bay, Goldwater Estate, Dashwood and Vavasour.

Turnbull said more acquisitions were likely.

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- BusinessDay.co.nz

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