Some of the leading brands of wine in the U.S. and U.K. will soon be in the hands of an Australian company. Treasury Wine Estates (TWE), one of the biggest publicly-listed winemakers in Australia has announced that it is buying a majority of Diageo's wine businesses in the U.K and U.S for US $552 million (AU$ 753 million).

Based in Melbourne, TWE is world famous for its Penfolds, Rosemount Estate and Wolf Blass brands. Incidentally, Penfolds was named 'Australian Wine Producer of the Year' at the International Wine and Spirit Competition in November 2014, reports the BBC.

The deal will hand over TWE, Diageo's U.K.-based Percy Fox businesses and Chateau and Estate Wines in the U.S. It will also provide US$48 million (AU$65.5 million) of vineyard in lease to TWE.

The Aussie company said the Diageo deal was “financially and strategically compelling” for its stakeholders and announced a positive financial outlook.

“This acquisition will transform our US business into a larger player of scale in the... high-growth US market,” said chief executive Michael Clarke.

He said the additional supply of wine will be a game-changer for its U.S. brands, and it will give an immediate opportunity to expedite growth in the markets of U.S, Canada, Asia and Latin America.

Johnnie Walker fame

Diageo is famous for its Johnnie Walker, Smirnoff vodka and Guinness brands. It owns vineyards at Napa Valley in California. Its popular UK wine brand Blossom Hill also comes under the deal.

Diageo is reportedly selling the wine brands to overhaul its business. In early October, Diageo announced the sale of stakes in two beer brewers to Heineken.

"Wine is no longer core to Diageo and this sale gives us greater focus. With the completion of this transaction Diageo will have released £1billion (AU$2.12) billion from the sale of non-core assets since the start of the financial year,” said Diageo chief executive Ivan Menezes.

Strong revival

ASX-listed TWE has fought some hard phases in recent times. In August 2014, it posted its first annual loss as sales slumped in China and oversupply became an issue in the U.S. market.

However, a revival was in sight since 2015 as the Aussie wine company posted an annual net profit of AU$77.6 million, following the revival in China, and elsewhere.

US brands

Thanks to the takeover, many well known U.S. wine brands such as Beaulieu, Sterling Vineyards, Acacia, Provenance and Hewitt will come under the belt of TWE. The transaction now awaits regulatory approvals, including a U.S. anti-trust review and if all goes well, the deal will be through in three months, reports USA Today.

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