Marlborough Lines looking to sell down investment in Yealands Wine Group

Marlborough Lines is looking to sell a stake in Yealands Wine Group. Photo / Supplied

Marlborough Lines is looking to sell a stake in Yealands Wine Group and reinvest the money in its electricity lines business.

Marlborough Lines bought a majority stake in Yealands Wines for $89 million in 2015, promoting it at the time as a way to "provide increased dividends to consumers".

The deal raised eyebrows in corporate governance circles. Business commentator Brian Gaynor wrote at the time that the deal was a "worrying reminder of the 1980s when manufacturers purchased kiwifruit farms, mining companies bought retailers and fitness centres got into property development. Most of these transactions were not successful in the longer term."

In mid-2018, Marlborough Lines completed the takeover, paying an entity controlled by Peter Yealands almost $23m for his remaining stake.

At the time the High Court had suppressed the fact that Peter Yealands and two former senior staff at the winery and Yealands Wines Group were being prosecuted by the Ministry for Primary Industries for a case relating to adding sugar to wine destined for Europe, a crime under European Union law.

In November 2020 - the trustees of Marlborough Electric Power Trust (the owner of Marlborough Lines) faced civil action by a local businessman concerned about whether the trust beneficiaries - tens of thousands of electricity users in the Marlborough region - had been kept informed, with particular focus on the performance of Yealands.

Today Marlborough Lines chairman Phil Robinson said it was looking for a strategic partner to take on a large or significant position in Yealands so it could get some equity out to put into its energising Marlborough strategy.

"Ideally [we are looking] for someone who has experience in the wine industry or FMCG [fast-moving consumable goods]. We just want to spread the net and see who shows interest.

"The strategic partner needs to be the right fit."

He said it was not a distressed sale.

"The performance has been fine. It has had some challenging years. The whole industry had a tough year the previous vintage."

But he said Yealands was on a good trajectory and had a good growth plan.

"We are very comfortable with where we are going and if we don't get that strategic partner that we are looking for we are quite happy to carry on holding it."

Asked why it wanted to retain a stake, Robinson said it had a separate holding company which looked after its investments.

"We want to have a bit of a spread of industries. It's local. A lot of us are familiar with business and know how it has been developing over the last 30 years."

Robinson said they hoped to get a preferred purchaser lined up by the end of 2022 although he did not expect the economic completion to take place until the end of the financial year in 2023.