Californian Vineyard Founded by Lebanese Migrants Sells for Up to $1 Billion
Winemaker DAOU was set up by two brothers who fled Lebanon during civil war in the 1970s
SYDNEY—A Californian vineyard set up by two Lebanese migrants who got their first break making wines in a garage in rural San Diego has been acquired by Australia’s Treasury Wine Estates, one of the world’s largest vintners.
DAOU Vineyards, owned by Georges and Daniel Daou, has agreed to be bought by Treasury Wine Estates for up to $1 billion in a move the Australian company said provides it with scale to potentially launch a luxury wine division covering the Americas. Treasury is among major producers seeking to generate more revenue from premium wines, which can sell for hundreds of dollars per bottle, as data suggest consumers are buying less bulk wine.
DAOU was set up by the two brothers who fled Lebanon with their family during the country’s civil war, which began in the 1970s. According to the company’s history, a missile struck the sidewalk in front of the Daou’s home in 1973, sending shrapnel tearing through the house.
The family first settled in France where Georges and Daniel Daou developed an interest in wine that they then pursued in earnest around a decade after moving to California in the early 1980s. Daniel Daou had experimented for years with winemaking in his garage in San Diego, tending to a one-acre vineyard of Cabernet Sauvignon.
Now, the company sells wines under the DAOU brand, including the Malbec, Semillon and Cabernet Sauvignon varietals, from its vineyard at Paso Robles at prices up to $275 a bottle.
Treasury Wine, which has a market value of $5.56 billion, on Tuesday said the acquisition of DAOU would accelerate its so-called premiumization strategy amid a crowded market for bulk wine. “We continue to see strong long-term growth trends for luxury wine in Treasury Wine’s key global markets, with a significant value-creation opportunity,” Chief Executive Tim Ford said.
Treasury said it has agreed to pay $900 million upfront for what it called the fastest-growing luxury wine brand in U.S. trade over the 12 months through Oct. 8. It could pay up to $100 million in additional earn-outs linked to growth targets over the three years through 2027.
Treasury, which is staggering shipments of its fiscal 2024 premium wines with the aim of having sufficient supply for China if that country scraps longstanding tariffs on Australian imports, will fund the acquisition with a fully underwritten entitlement offer of 825 million Australian dollars, equivalent to $525.9 million.
It will place shares worth 157 million Australian dollars with Georges and Daniel Daou, who will remain involved with the wine business, with some of the stock available to their charitable foundation. Treasury will also use $311 million of debt from a new $350 million facility.
Corrections & Amplifications
Treasury will place shares worth 157 million Australian dollars with Georges and Daniel Daou, with some of the stock available to their charitable foundation. An earlier version of this article incorrectly said all of the stock would be placed with the foundation. (Corrected on Oct. 30)