Penfolds-maker Treasury Wine Estates Ltd. agreed to buy DAOU Vineyards LLC in California for as much as $1 billion to expand the company’s stable of US luxury brands.

Treasury is paying $900 million upfront for the business and an additional $100 million if certain targets are hit, the company said Tuesday. Melbourne-based Treasury is funding the deal with an A$825 million ($526 million) rights offer. It’s also taking on debt and issuing new shares to DAOU’s owners.

DAOU owns the DAOU Mountain Tasting Room, four luxury vineyards, four wineries and 411 acres of vineyards in the Paso Robles winemaking region on the central coast of California. Known for its cabernet sauvignon-based Patrimony wines, the business was founded in 2007 by Georges and Daniel Daou.

According to Treasury, the purchase fills a key hole in the company’s US lineup of wine priced between $20 and $40 a bottle. Some of DAOU’s luxury wine sells for as much as $500 a bottle.

“We continue to see strong long-term growth trends for luxury wine,” Treasury Chief Executive Officer Tim Ford said.

Shares in Treasury were halted for the capital raise.

PJT Partners and law firm Davis Wright Tremaine are advising Treasury on the deal. DAOU’s financial advisor is Centerview Partners LLC and its legal advisor is Sheppard Mullin.

(Updates with trading halt in the penultimate paragraph and the advisors on the deal in the last paragraph.)