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Highlights
- Acquisition in China: Treasury Wine Estates (TWE.AX) acquires 75% of Stone and Moon Winery for AU$27.5 million, with an option to acquire the remaining 25% after five years.
- Market reaction: Shares jumped 4.1% to AU$11.96, their highest level since October 23, marking the biggest intraday percentage gain since October 14.
- Strategic move: The acquisition aligns with growing wine demand in China and positions TWE for long-term market access and expansion.
Treasury Wine Estates (ASX:TWE), one of the world’s leading winemakers, saw its shares climb 4.1% to AU$11.96 on Tuesday, reaching their highest level in over a month. The rally follows the company’s announcement of its acquisition of a 75% stake in Ningxia Stone & Moon Winery Co ("Stone and Moon"), located in north-western China, for AU$27.5 million (US$17.7 million).
The deal, which includes an option for Treasury Wine Estates to acquire the remaining 25% of the winery after five years, is part of the company's strategy to strengthen its presence in the growing Chinese wine market.
Key Details of the Acquisition
The Stone and Moon Winery boasts an asset base of 43 hectares of planted vineyards and potential for future expansion, including the development of a cellar door facility. Analysts at Citi have expressed optimism about the acquisition, citing the increasing popularity of wine among Chinese consumers and the winery’s strategic positioning in the country’s wine industry.
Citi also highlighted the long-term market access prospects for Treasury Wine Estates in China and the potential to scale up operations at the newly acquired facility.
Market Performance and Outlook
The acquisition news drove Treasury Wine Estates’ stock to post its biggest intraday percentage gain since October 14. The company’s shares have now risen 6.6% year-to-date (YTD), signaling strong investor confidence in its expansion strategy.
With the Chinese wine market continuing to grow, this acquisition positions TWE to capitalize on the rising demand and strengthen its foothold in the region.
