Treasury Wine Estates (TWE) has agreed to pay $65million to settle a shareholder class action launched by law firms Maurice Blackburn Lawyers and Slater & Gordon.

The proceeding commenced against TWE in the Supreme Court of Victoria in 2020 and is a consolidation of the two shareholder class actions that were notified to the market on 3 April 2020 and 1 May 2020.

The proceeding was commenced after TWE revised its earnings guidance on 28 January 2020, downgrading its fiscal 2020 earnings growth forecast from 15-20% to 5-10%. Following the announcement, TWE’s share price dropped by 25% on 29 January 2020.

At the time the company blamed the downgrade on a number of factors, primarily on underperformance in the US market.

The class action included allegations that TWE engaged in misleading or deceptive conduct and breached its continuous disclosure obligations. The proceeding was commenced on behalf of shareholders who entered contracts to acquire interests in TWE’s fully paid ordinary shares between 30 June 2018 and 28 January 2020.

In reaching the settlement, TWE said it made no admission of liability. It said the settlement was a “commercial decision made in the best interests of shareholders to enable TWE to remain focused on executing against its strategy”.

Maurice Blackburn principal Julian Schimmel said: “We are pleased with this outcome for shareholders on the eve of a trial listed for seven weeks and to have achieved that result without the need to endure further delay in following through with the court processes.

“The settlement is another example of Australia’s class actions regimes operating to advance the interests of investors who claimed to have been misled by listed companies.”

It is the second TWE has settled a shareholder class action brought against it for allegedly engaging in misleading and deceptive conduct.

In 2020 the company paid out $49 million following Brian Jones and other TWE shareholders, represented by law firm Maurice Blackburn, launching a Federal Court action against TWE for allegedly breaching disclosure obligations over writedowns incurred in 2013 to deal with excess, aged and deteriorating stock in the United States.

TWE remains positive about US growth

Treasury Americas reported a 13.1% increase in EBITS to $230.5million in TWE’s FY24 results, driven by the 2H24 contribution of its newly acquired DAOU wines and 14.1% NSR growth across Treasury Americas’ other Luxury portfolio brands, supported by increased wine availability, particularly for Stags’ Leap and Frank Family Vineyards.

TWE CEO Tim Ford said “Our fiscal 2024 performance reflects the excellent momentum we continue to build behind our Luxury brand portfolios in Penfolds and Treasury Americas, which now represent over 75% of Group EBITS.

“These two outstanding Luxury wine platforms have very clear strategic direction and execution priorities, and we have great confidence in both as strong drivers of long-term growth for Treasury Wine Estates. In relation to our Premium brands, we are focused on improving the performance of this global portfolio to deliver greater value to TWE overall, with implementing key changes to enable the evolution to the new Global Premium division a key focus through F25.”

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