Treasury Wine Estates will buy luxury Californian winemaker DAOU Vineyards in a $US1 billion ($A1.6 billion) deal as it continues to expand into the North American market.
The Penfolds owner, which already boasts several US brands, says acquiring DAOU will fill a luxury wine-shaped gap in the group's North American portfolio.
"The combination of Treasury Americas and DAOU creates a leading luxury wine business in the United States, the world's largest luxury wine market which is growing strongly, with an unparalleled portfolio of highly acclaimed and admired luxury brands," Treasury chief executive Tim Ford said on Tuesday.
Treasury will pay $US900 million upfront to acquire the entirety of DAOU's shares, with an extra $US100 million payable if performance metrics are met.
The acquisition will be funded by an $A825 million equity raising, a $US100 million placement of new Treasury shares to be issued to the existing owners of DAOU and $US311 million of debt.
Brothers Georges and Daniel Daou founded the company in 2007 in the Paso Robles area of California, one of the state's fastest growing wine regions and a particular hotspot for luxury cabernets.
DAOU owns four wineries, 411 acres of vineyards and a tasting room. Its portfolio spans five product tiers ranging from $US20 to $US500 per bottle.
"The last frontier has always been international, and as part of the Treasury Wine Estates portfolio, we have unlocked the potential to be amongst the highest-end wines for consumers to enjoy globally," the Daou brothers said.
The deal is expected to be completed by the end of the calendar year, assuming it passes US regulatory approval.
Treasury says the move will provide further scale to help set up a standalone Treasury Americas Luxury division.
It claims the acquisition will boost earnings per share and create operating cost savings of greater than $US20 million by mid-2025 through increased optimisation and efficiencies.
"On face value the acquisition rationale is solid, and financial metrics look attractive," E&P Capital retail analyst Phillip Kimber said.
Mr Kimber says Treasury's attractiveness for investors is underpinned by the increasing likelihood of a lifting of a Chinese trade ban on Australian wine, which has essentially blocked the company off from accessing the lucrative export market.
Treasury shares were trading at $12.10 before entering a trading halt on Tuesday.
