Demerger Plans, Will Stock Benefit?
TWE is planning to demerge one of its business segments
demerger is a long process - lots of regulatory approvals and internal restructuring, so it will take a minimum of 18 to 24 months.
TWE was formerly the wine division of international brewing company Foster's Group.
In 2011, Fosters split into separate brewing and wine companies.
Shareholders generally tend to benefit once the company demerges its division.
Foster’s began to build its wine division from 1995 onwards. Through acquisition, it built the division into one of the world's largest winemakers.
However, the wine division performed poorly, often draining cash from the highly profitable brewing business.
Key Executive Team
Potential Demerger of Penfolds
the company is basically separating the luxury portfolio and the commercial portfolio
in the luxury segment it wants to charge premium from the customers
Sales and profitability movement
Growing sales: from $2.4 billion in 2017 to $2.9 billion in 2020.
Since the company is largely in mature economies this sales growth will not be very high.
Debt and gearing level movement
Rapid increase in long term debt.
The debt of the company has increased faster than growth of sales.
Increasing retained earnings.
Company is not diluting shareholder's equity = consistent common stock quantity.
171020
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