Mondavi to Weigh Bid for All of Company
Robert Mondavi Corp. said last month that it was putting its famous high-end winery and luxury brands up for sale, but now the whole company is in play.
On Monday, the company said it received an unsolicited offer for the entire business -- including its landmark Oakville winery in Napa Valley that makes $125 bottles of Cabernet Sauvignon and its massive Woodbridge operation near Lodi, Calif., that turns out 8 million cases a year of inexpensive wine.
Chief Executive Craig Evans declined to disclose the name of the bidder or the value of the offer. Evans characterized the bid as a proposal that was not firm and could be changed.
Mondavi disclosed the offer after the stock market closed. Its shares rose 70 cents to $39.87 on Nasdaq, giving the company a market value of $656 million.
After reviewing the offer Monday, the company’s board of directors decided not to reject it out of hand, Mondavi Chairman Ted Hall said.
Rather, it will be considered along with a plan by the company to unload the famous Mondavi winery and brand, along with other high-end vineyards and labels so that the remaining part of the company can focus on selling wine that retails for less than $15 a bottle.
Hall said the board would base its decision on which strategy would “create the most value for shareholders.”
The board declined a request by the bidder to delay a recapitalization of the business that was expected to reduce the founding Mondavi family’s voting control of the company from 85% to 40% by converting a two-tier stock structure into a single class of shareholders.
Changing to a “one share, one vote” structure -- expected to be approved at the company’s Nov. 30 annual meeting -- will allow the board to “act upon all our options,” Hall said.
One of the best-known names in the business, Mondavi has holdings from Napa to Tuscany, Italy, and would be attractive to a number of large wine companies, analysts said. Even before this latest announcement, analysts said it might make sense for a rival to purchase the whole business rather than just the luxury brands and assets.
Competitors such as Constellation Brands Inc., Allied Domecq and Pernod Ricard have been mentioned as possible bidders.
Mondavi’s financial performance has sagged in recent years as competition for inexpensive wine heated up and a slow economy hurt sales of premium vintages. Profit plunged from a peak of $43 million in fiscal 2001 to $26 million in fiscal 2004, a 39.5% slide. Sales fell 7.5% over the same period, from a high of $506 million to $468 million.
