| MINEOLA, N.Y., Sept 4
MINEOLA, N.Y., Sept 4 The privately held U.S.
producer of AriZona iced tea might face insolvency if the judge
overseeing a dispute between its founders sets its value at $3
billion or greater, a lawyer for the co-owner running the
company said Thursday.
During closing arguments in New York state court, Louis
Solomon, an attorney for Beverage Marketing USA Inc co-owner
Domenick Vultaggio, said the AriZona beverage maker should not
be forced to buy out estranged business partner John Ferolito
based on "la la land" numbers.
"I do not want to find myself in bankruptcy court," Solomon
told a judge.
The closing arguments capped a valuation trial to determine
how much Vultaggio and Beverage Marketing must pay to buy the 50
percent stake held by the Ferolito and his son's trust.
Nicholas Gravante, Ferolito's attorney, countered the
company has many suitors willing to pay billions of dollars,
including Tata Global Beverages Ltd, Nestlé SA
and Coca-Cola Co, among others.
While the company's valuation will be determined as of 2010,
Gravante said a sale based on AriZona today could easily fetch
"Everybody wants a piece of this company," he said.
Based in Woodbury, New York, Beverage Marketing and its
related companies have 1,000 employees and annual sales of $1
billion, Solomon has said.
AriZona had a 37.4 percent share for U.S. ready-to-drink tea
by case volume in 2013, according to Beverage Digest, ranking
No. 1 above PepsiCo Inc's Lipton and Coca-Cola.
The non-jury trial before state Supreme Court Justice
Timothy Driscoll followed six years of litigation between
Ferolito and Vultaggio, onetime friends from Brooklyn who
launched AriZona in 1992.
The partners in 1998 agreed to restrict the transfer of
company stock to outsiders. But by 2005, Ferolito wanted to sell
his stake and began pushing for a corporate sale.
After Vultaggio, its chairman, refused, Ferolito asked a
court to declare the stock sale restrictions unenforceable.
Following unfavorable court rulings, Ferolito filed a
lawsuit to dissolve Beverage Marketing. Vultaggio later elected
under state law to buy out his partner.
Later court rulings allowed Beverage Marketing itself to buy
Ferolito's stake. The trial covers all AriZona entities.
Solomon, who argues the company is worth just $426 million,
said Ferolito's multibillion dollar valuation wrongly assumes
continued growth and ignores increased costs.
"That's not grounded in reality," he said. "It's grounded in
But Gravante, Ferolito's attorney, said his expert's
analysis along with one Morgan Stanley conducted for
management in 2010 showed the company was worth at least $3
"Now we have to get this family out of this company," he
Driscoll has said he will rule by Oct. 13.
The case is Ferolito v. AriZona Beverages USA LLC, et al,
New York Supreme Court, Nassau County, No. 004058-12.
(Reporting by Nate Raymond in New York; Editing by Tom Brown)