Australian Vintage CEO Fired Over Conduct Amid Potential Merger with Accolade

The CEO of Australian Vintage was abruptly fired over “conduct issue”, as the publicly listed company is seeking a merger with Accolade Wines.

The chairman of Australian Vintage recently stated that CEO Craig Garvin was dismissed for “lack of judgment,” but this will not affect the company’s prospects of merging with Accolade Wines, which would create an enlarged No. 2 biggest Australian wine giant.

In February, Australian Vintage announced it was in discussions to merge with Accolade Wines, currently the third and second largest wine producers in Australia, respectively.

During talks with Accolade about the merger, Australian Vintage suddenly fired its CEO.

Last Friday evening, Australian Vintage announced in a statement to the Australian Stock Exchange that Garvin would be leaving his position with immediate effect.

“After careful consideration and discussion between Mr Garvin and the board, the board has terminated Mr Garvin’s employment for engaging in conduct that, in its view, displayed a lack of judgment and was inconsistent with the values of the company and the high standards expected of its chief executive officer.

“While we are disappointed by the circumstances leading to his departure, we believe this is in the best interests of the company and shareholders.”

Garvin had been CEO of Australian Vintage since 2019, previously heading the Australian operations of dairy giant Parmalat. On Sunday, he stated that he is considering taking legal action, as reported by local media Financial Review.

Richard Davis, the chairman of Australian Vintage, said on Sunday that Garvin’s departure has no impact on ongoing discussions with Accolade Wines. He noted that negotiations between the two organizations are still underway and Perrin is very familiar with the business and the merger talks.

Davis emphasized that there is no certainty in any transaction, but if the two groups merge, it would generate significant benefits. The deal involves many aspects, with synergy being the core.

Additionally, he did not want to comment further on Garvin’s departure.

However, fund managers were surprised by the sudden upheaval in Australian Vintage’s senior management, speculating that this crisis could jeopardize the merger.

“The Accolade deal has the potential to massively transform the company,” said Oberg, a portfolio manager at WAM Capital and a shareholder of Vintage Group. “We were very supportive of Craig and his team.

Australian Vintage, which once heavily targeted the Chinese market, listed itself for sale after encountering anti-dumping measures.

Australian Vintage’s main brands include McGuigan, Tempus Two, Nepenthe, and Barossa Valley Wine Co. In 2018, the company began aggressively promoting in China after receiving huge investments from China. In 2017, Yuan Jiang, founder of China’s online wine retailer YesMyWine.com, invested in Australian Vintage through Vintage China Fund to promote Australian Vintage’s wines in the local market.

However, due to the pandemic and anti-dumping measures in 2020, Australian Vintage became very low-key in China.

Accolade Wines had also gone through ownership change recently. Last June, a consortium led by Bain acquired its ownership from private equity giant Carlyle Group.

Currently, the high tariffs China had imposed on Australian wines were lifted a few weeks ago, but as the new CEO of Australian Vintage said, the challenges remain significant. These challenges include more cautious Chinese buyers and a large inventory of low-end Australian wines.