Foley eyes $7.4 mln investment to develop Mt Difficulty
By Gavin Evans
Nov. 21 (BusinessDesk) - Foley Family Wines says it expects to invest about $7.4 million for development during the next three years as part of its planned purchase of Mt Difficulty Wines.
The $52 million purchase, conditionally agreed a year ago, is awaiting ministerial approval after a positive recommendation by the Overseas Investment Office, the company told shareholders today.
Noting the government’s focus on job creation, adoption of new technology and increased export receipts from such land sales, Foley said the purchase will create 10 new jobs, a 67 percent increase for Mt Difficulty, and will lift exports by 61 percent during the next five years.
Blenheim-based Foley will also increase processing at its Grove Mill Winery site by 33 percent, lifting it to the equivalent of 83 percent of Mt Difficulty’s current capacity.
Its shares last traded unchanged at $1.38, and are down about 8 percent so far this year.
Foley agreed the purchase of Central Otago-based Mt Difficulty last November as part of a strategy to increase returns by building scale, reducing costs and getting more from its premium brands.
The parties had initially expected to complete the transaction by mid-2018. Last month the original $55 million sale price was reduced to $52 million in exchange for Foley investing up to $3 million to expand Mt Difficulty’s cellar door operation and restaurant.
Last month the company, which is moving to the main board of the NZX, reported a 34 percent increase in first-quarter case sales to 129,000. Bottled sales revenue rose 40 percent to $10.9 million.
Today it said it has increased prices here, Australia and in the UK. October exports were a record 57,000 cases and shipments to the US during the past four months were twice those a year earlier.