The top contributing stock for the quarter was Treasury Wine Estates (ASX:TWE), an Australian-based vineyard operator and winemaker that also has significant assets in North America, as well as a global marketing and distribution business. During the quarter Treasury Wine Estates received a preliminary, highly conditional bid from a global investment firm, Kohlberg Kravis Roberts (KKR), to purchase the company for AUD 4.70 per share. The bid was rejected, with management stating that the per-share offer amount undervalued the company. However, the board of directors indicated that the company would consider any new proposals that reflected a price closer to their perception of fair value. Discussions with KKR have since ended without any subsequent offers. We believe that management made the correct decision, as we too feel that the business value of Treasury Wine Estates is worth more than what KKR offered. We recently spoke with Treasury’s Chairman, Paul Rayner, and new CEO, Michael Clarke, with regard to this issue, in addition to recent management changes and a new AUD 35 million cost-cutting program, and we are confident that the company’s leadership team has been substantially improved and is working to increase Treasury Wine Estates’ overall value for the benefit of shareholders.
From Oakmark Intl Small Cap (Trades, Portfolio)'s Second Quarter 2014 Letter.
