The Treasury Wine Estates Ltd (ASX: TWE) share price has edged higher after an early morning announcement.
Shares in the Aussie wine maker and distributor are 0.25% higher at $10 in early trade after the company response to ongoing media speculation around a potential demerger.
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What's happening?
There has been intense speculation in recent months regarding a demerger of one of Treasury Wines' most recognisable brands. The group's premium Penfolds wine label was rumoured to be under review by Penfolds.
That includes suggestions in a 7 February article in The Australian that Treasury Wines was investigating a demerger of its global operations into three separate businesses.
However, today's announcement has provided some further context for shareholders. Treasury Wines confirmed that it has "formally paused work on a potential demerger of its Penfolds brand", as noted at its November annual general meeting.
Treasury Wines is "not currently considering a demerger of any brands/businesses within its portfolio", the company added. The company continues to assess internal operating models to deliver "long term value". That includes "separating focus across its brand portfolios" which hints that there could be more changes to come.
The Treasury Wines share price has lifted slightly on the news in early trade. That comes as the S&P/ASX 200 Index (ASX: XJO) edges 0.3% higher to start the week's trade.
How has the Treasury Wines share price performed recently?
The Treasury Wines share price has been under pressure in the last 12 months. The coronavirus pandemic and March 2020 bear market saw the company's value plummet lower.
That broad market weakness was compounded by ongoing trade tensions with China.
China is a major wine purchaser and a lucrative market for Treasury Wines, including its Penfolds brand. However, there has been rising concerns over counterfeit labels and increasing tariffs for Aussie wines.
That has seen shares in the Aussie wine group slump 15.3% in the last 12 months.
