Evans & Tate have rejected a $131 million takeover proposal from Yarraman Winery Inc following a week of close discussions with senior management from the US-listed wine group.
Evans & Tate have rejected a $131 million takeover proposal from Yarraman Winery Inc following a week of close discussions with senior management from the US-listed wine group.
E&T had until Tuesday to decide whether to accept Yarraman's offer of one share for every nine E&T shares, effectively valuing E&T shares at 19.8 cents.
E&T shares closed at 17.5 cents.
In an announcement to the Australian Stock Exchange following the market's close this afternoon, E&T said it would not accept Yarraman's offer in its current form.
Yarraman director Bill Middleton has spent the week in Perth to sure up the deal with E&T and spruik its credentials with the local media.
WA Business News understands that E&T will continue to hold discussions with Yarraman about a potential deal and is pressing for better terms.
Earlier today Mr Middleton had said he was confident the E&T board would accept Yarraman's offer and that there were no "insurmountable hurdles" to overcome.
He said that his company, which is believed to have the backing of financial powerhouse GE, was in discussions with other Australian wineries but they were not wineries based in Margaret River.
Mr Middleton said those discussions would continue to take place regardless of whether its E&T takeover was a success or failure.
However, Mr Middleton said Yarraman was particularly keen to pick up E&T, even with its $90 million bank debt, because it had substantial size.
"It will get us some attention in the US markets," he said. "We will have a business that will have sales in excess of $US80 million. If we were doing a $US20 million or $US25 million transaction at this stage, it certainly wouldn't get the support that we are getting from the financial community."
E&T posted revenue in excess of $80 million last financial year but recorded a loss of $63.9 million.
It emerged this afternoon that Franklin Tate's deal to sell two thirds of his holding to Yarraman, or 19.9 per cent of E&T's issued capital, was dependent on Yarraman successfully acquiring E&T.
Mr Tate was set to pocket $3.6 million for the share sale but WA Business News understands the cash will go straight to ANZ, which provided a share loan to Mr Tate.
Mr Middleton believed Yarraman could boost E&T's sales to $300 million to $400 million over the next few years.
"That is what is getting the attention of our investors," he said.
E&T confirmed that Mr Tate had been involved in the board's discussions regarding Yarraman's takeover but did not vote on matters related to the deal.
