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.