Penfolds maker buys Californian luxury winemaker for $1.6 billion

Penfolds owner Treasury Wine Estates is upping its bets on the global growth potential of the luxury wine market, agreeing to fork out up to $1.6 billion to buy high-end Californian winemaker Daou Vineyards.

Treasury Wine Estates chief executive Tim Ford said the group continued to see long-term growth opportunities in the luxury wine segment.The deal will be funded through a combination of an $825 million equity raising, a $157 million placement of shares to the owners of Daou, and taking on $311 million of debt, the Melbourne-based company said in a statement to the Australian sharemarket on Tuesday morning.

The group makes wines across five product tiers ranging from $US20 and $US500 a bottle, and owns a tasting room venue, four luxury vineyards and four wineries.

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