Yealands Wine stake up for sale

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 holding in Yealands Wines for $89 million in 2015, promoting it as a way to “provide increased dividends to consumers”.

The deal raised eyebrows in corporate governance circles. Business commentator Brian Gaynor wrote that it 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 Yealands, two former senior winery staff 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.

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

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.

“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.”