It's the last-chance saloon for Marlborough-based New Zealand Wine Company, according to a report on its proposed merger with an American billionaire's Kiwi wine interests.

An independent report by Simmons Corporate Finance says the offer giving American Bill Foley an 80 per cent stake in the NZAX-listed New Zealand Wine Company for $6 million cash and folding in his Foley Family Wines company was a fair one. The issue price of $1.38 is more than 50 per cent higher than the value of the Kiwi company's shares.

The merger could more than quadruple the company's $7.37m market capitalisation, which might raise the company's profile and improve the liquidity of its shares, the report says.

But, most importantly, it would boost the company books and allow it to repay a $5m loan to ANZ National Bank, which is due this year. If the merger did not happen, the company's only avenue to repay the loan would be to liquidate the company's assets, which would return between 50c and $1.19 a share to the existing shareholders, the report says.

With a merger, the company's production was tipped to grow from about 350,000 cases a year to more than 600,000 cases.

"The increased size and scale of the company should better position it to compete in the global wine industry, " the report says.

At a meeting in Blenheim on August 14, shareholders are scheduled to vote on the merger and the issue of an $11.8m convertible note to Mr Foley's holding company. The merger is subject to Overseas Investment Office approval.

- The Marlborough Express

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