Mondavi Shareholders Approve Constellation Buyout

Vote on the $1.3-billion offer took place without controversy

Daniel Sogg

Posted: Wednesday, December 22, 2004

Some might consider it the end of an era, but this morning, in a San Francisco hotel meeting room, things went strictly by the numbers as Robert Mondavi Corp. shareholders accepted a $1.3-billion cash buyout from drinks giant Constellation Brands.

None of the Mondavi family members, who founded their Napa Valley winery in 1966, were reportedly present at the vote, from which the press was excluded. Shareholders in attendance said that the meeting took place without incident and lasted less than 30 minutes, with no more than 50 people present. Mondavi Corp. president Greg Evans introduced company officers and outlined the proxy, to which there was little apparent objection.

"Everyone said yea or nay, he hit the gavel and it was over," said Jack Redmond, a San Anselmo, Calif., furniture dealer who has owned Mondavi stock since the company went public in 1993.

"It wasn't rushed, but there wasn't that much to talk about," added Redmond's wife, Cheryl.

More than 80 percent of the votes cast by Class-A shareholders and 94 percent of the votes cast by Class-B shareholders—which are mostly Mondavi family members—were in favor of the sale, according to a statement from Fairport, N.Y.-based Constellation. Mondavi is now a subsidiary of publicly traded Constellation, which is the world's largest wine marketer and also owns numerous prominent beer and liquor brands.

The deal pays $56.50 for every share of outstanding Class A common stock. Class B shareholders receive $65.82 per share. Those payments represent a slight increase over Fairport, N.Y.–based Constellation's initial offer of $53 and $61.75 per share, respectively.

A remaining hurdle to the merger was addressed on Dec. 20, when Napa Superior Court presiding judge Scott Snowden rejected a request to block the sale, brought by plaintiffs in a lawsuit seeking class-action status. Bamboo Partners v. Mondavi Corp. alleges that members of the Mondavi board had a conflict of interest due to previous dealings with Constellation, and that the company's articles of incorporation require that Class-A and -B shareholders receive identical compensation for their stock. Although Snowden did not dismiss the lawsuit, which may still proceed, he ruled that there were insufficient grounds to block the sale.

Mondavi shares had not been performing well in recent years; between January 2001 and April 2003, the stock lost more than 60 percent of its value, hitting a low of around $20 on April 1, 2003. But since then, buyout rumors fueled price increases, with shares closing yesterday at $56.52.

The Mondavi shareholders interviewed were pleased with their investment premium, but they also acknowledged sadness that Napa Valley's most famous winery no longer remains in family hands. "It's disappointing that it happened," said Richard Hendricks, a Mondavi shareholder from Orange County, Calif. "I guess if you take your private family company and go public, it's a whole new game."

The Mondavi brands--including Robert Mondavi, Robert Mondavi Private Selection and Woodbridge--join a portfolio of wines that range from Almaden box wines and Arbor Mist fruit-flavored wines to respected California names such as Franciscan Oakville, Ravenswood and Simi.

Mondavi's Arrowood and Byron brands are up for sale. Constellation has not yet revealed the fate of two international joint ventures. Mondavi's 50 percent stake in the Chilean wineries Seña and Arboleda was sold earlier this fall to its partner, the Chadwick family of Viña Errazuriz. The partners in Opus One in Napa Valley (the Rothschild family of Bordeaux's Château Mouton-Rothschild) and Ornellaia in Italy (the Frescobaldi family of Tuscany) are believed to have been negotiating to buy out the other half of their ventures.

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