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Treasury Wine Estates buying Napa Valley’s Frank Family Vineyards for $315 million

Treasury Wine Estates Ltd., one of the world’s largest vintners, with brands from the North Coast and elsewhere, on Wednesday said it inked a deal to acquire Frank Family Vineyards, a Napa Valley winery known for its chardonnay, for $315 million.

The deal, set to close next month, comes as the publicly traded Australia-based company (ASX: TWE) said it has completed a selloff of lower-priced U.S. brands as part of a focus on higher-priced brands, a trend commonly called premiumization. Those divestments netted Treasury AU$300 million ($218 million), the company said.

The Frank Family Vineyards transaction would include the Calistoga winery and tasting room at 1091 Larkmead Lane, some of the vineyards (others would be leased) and the inventory. Annual production is about 160,000 cases, according to Treasury. Winemaker and General Manager Todd Graff would continue to oversee operations.

Proprietors Rich and Leslie Frank would remain involved with the brand and would retain ownership of Winston Hill Vineyard in Rutherford and Lewis Vineyard on the Napa County side of the Carneros winegrowing region. Treasury would get the Benjamin Vineyard and Rutherford and the S&J Vineyard in eastern Napa County.

Ben Dollard, president of Treasury’s Napa-based Americas business, called the deal “another important step towards our ambition of becoming the premium wine market leader in the Americas.”

Frank Family Vineyards fills a “key portfolio gap for luxury chardonnay,” the company noted. Treasury said it will use its national distribution network and California assets, including grape sourcing, to help grow the brand.

The acquisition would place Treasury as a No. 3 player in U.S. premium chardonnay and No. 2 for such wine retailing for over $25, the company said.

The deal price is figured to equate to 13.2 times earnings before interest, tax, depreciation, amortization and stock compensation, Treasury said. The company said it plans to pay for it with $240 million in debt plus cash, including proceeds from recent divestments.

Frank Family Vineyards last fiscal year had net sales revenue of $54 million and pro forma earnings of $21 million. Rich Frank started the wine company in 1992.

Treasury Wine Estates brands include Penfolds, Beaulieu Vineyard (BV), Beringer, Stags’ Leap, 19 Crimes and Sterling Vineyards.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.

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