Treasury Wine Estates settles lawsuit with shareholders
Australian wine giant Treasury Wine Estates (TWE) has agreed to pay shareholders A$65m ($43.7m) in response to class action proceedings made against it four years ago.
In an ASX statement today (14 October), the group said that it had reached a "principle agreement" to resolve two lawsuits made in April and May 2020.
The legal action followed TWE's tweak to FY20 guidance in January 2020, when the group cut its FY20 EBITS growth forecast to 5-10% from 15-20%.
The following month, TWE then issued a warning for the year, stressing that it no longer expected to hit the 5-10% EBITS growth target, due to the "significant impact" of the Covid pandemic on wine consumption in China.
TWE's EBITS ended up declining 22% in its FY20 to A$533.5m, while EBITS margin was down 4.0ppts, at 20.1%.
At the time, shareholders claimed the Penfolds maker had been "engaged in misleading or deceptive conduct" with shareholders, "and breached its continuous disclosure obligations".
The A$65m sum will be handed to investors "who entered contracts to acquire interests in TWE's fully paid ordinary shares between 30 June 2018 and 28 January 2020".
Speaking on the news, TWE added that despite reaching a settlement, it "makes no admission of liability.
"The settlement was a commercial decision made in the best interests of shareholders to enable TWE to remain focused on executing against its strategy," it said.
The latest agreement is also contingent on "finalisation and execution of a deed of settlement" as well as "approval by the Supreme Court of Victoria", the 19 Crimes owner added.
In its financial results for the year ended 30 June, TWE recorded total net sales revenues of A$2.73bn, a 13.1% increase on a reported basis and growing 4.4% organically compared to 2023.
Total group EBITS was up 12.8% year-on-year on a reported basis and 3.6% organically to A$658.1m. Gross profits rose 11.3% and 8.6% on a reported and constant currency basis to A$1.24bn.
Following the release of its results, the group announced plans to consolidate its premium wines division.
The move, which is expected to be complete by July 2025, sees it merging its Treasury Premium Brands (TPB) and Treasury Americas (TBA) unit into a new Global Premium Brands (GPB) division.
"Treasury Wine Estates settles lawsuit with shareholders" was originally created and published by Just Drinks, a GlobalData owned brand.
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