Southcorp buys Rosemount

Published: 23 July, 2008

A$1.4bn deal done 'Down Under'

In a deal that creates the largest premium wine company in the world, Southcorp Limited has bought its Australian rival, the family-controlled Rosemount Estate, for A$1.4 billion (542 million). The story broke late last Monday, with Southcorp's chairman, Rick Allert, describing the deal as a "company-transforming transaction". Southcorp's managing director and chief executive officer, Tom Park, said: "The combination of Southcorp Wines and Rosemount Estate brings together three of the world's premier global wine brands - Penfolds, Lindemans and Rosemount. This transaction supports our strategy of focusing on and growing our core brands around the world." Southcorp is a publicly listed company, while Rosemount, Australia's fifth largest wine producer and maker of the best-selling Shiraz in the US market, was controlled by the Oatley family. The family will get two seats on the Southcorp board and will be required to hold between 10% and 19.9% of Southcorp's issued shares for three years. Sandy Oatley and Rosemount's chief executive officer Keith Lambert are expected to be the board members, while Lambert is to become Southcorp Wines' chief executive. In last week's Harpers, Bob Oatley, in denying the deal, said: "I can guarantee everyone that Rosemount will not be swallowed up by anyone." It is expected that Rosemount's UK office in Surrey, headed by Peter Darbyshire, will close and the operation will be merged into Southcorp's south-west London headquarters. The future of Rosemount's recently formed joint venture with Mondavi is unclear. Southcorp Wines' Europe president as on 1 January, Mario Micheli, was not available for comment. He was due to arrive back from Australia on Wednesday. Southcorp will own the only two brands, Lindemans and Rosemount, in the top ten wine brands in both the USA and UK. It will have revenues two to three times greater than its nearest competitors in these markets. Rosemount claims the highest volume growth and profit growth, the highest margins and highest return on equity of all premium wine companies in the world. As one informed observer commented: "The fun's just started."

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