India's Champagne Indage to buy Australian winery for $60 million
India (IBTimes) - India's largest wine manufacturer, Champagne Indage Ltd (CIL) has signed a Heads of Agreement with Australian Vintage Ltd (AVG) for acquiring the latter's 90,000 tonne Loxton Winery and Austflavour business in South Australia for $60 million.
The deal, subject to CIL undertaking and satisfying due diligence requirements within the next four weeks; and the signing of a wine and contract processing agreement, is expected to be completed by the third quarter of this year.
"The purchase will expand our winemaking facilities with quality fruit, facilities and people. Loxton's additional capacity will allow us to meet the increasing demand in India and in other countries for quality wine," said Shamrao Chougule, chairman, CIL.
CIL CFO Rajesh Chalke said the purchase adds to its 21,000 tonne Monash winery, bought for $10 million from agricultural company Tandou a year ago and will triple the company's total capacity to 14 million cases a year.
The acquisition will help CIL, which has plans of "going global," to focus on setting up production facilities in countries such as Australia, Argentina, France, Italy and South Africa, where domestic consumption is strong, he said.
Prior to the Tandou acquisition, CIL had bought UK-based wholesale wine distributor McKinley Vintners and also Scotch whiskey brand, Kingdom of Fife.
Dane Hudson, CEO, Australian Vintage, said the sale was a strategic one. "The sale of the Loxton Winery is an important step in executing our strategy to be the lowest cost producer of wine in Australia. It follows the exit of under-utilized assets over the past six months including the Griffith Winery and Hunter Ridge Winery, Vineyard and Warehouse," he said.
"We're pleased we're able to find a buyer and sell at a price we're comfortable with," Hudson said.
The funds from the sale of Loxton would be reinvested to expand the business operations of Australian Vintage in the Mildura region and pay off debt, Hudson added.
"In Mildura we now have a world class production hub that includes quality winemaking, bottling and distribution facilities that meet our customer requirements internationally. Concentrating the majority of our facilities in one area means improved production efficiencies and higher customer service levels," he said.
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