MINEOLA New York (Reuters) - A lawyer for an estranged co-owner of AriZona iced tea seeking to sell his stake in the company behind the popular brand urged a judge to value the beverage maker at $4 billion, an amount that the other co-owner disputed as far too high.
Nicholas Gravante, an attorney for John Ferolito, said on Wednesday that a judge in Mineola, New York, should use past offers for the beverage company when deciding how much Ferolito’s former business partner, Domenick Vultaggio, and Beverage Marketing USA Inc, must pay to buy out the 50 percent stake held by Ferolito’s family.
Offers from Tata Global Beverages Ltd, Nestlé SA, Coca-Cola Co and others have pegged the company’s worth at as much as $4.5 billion, he said during opening arguments of the valuation trial.
“The fair value is equal to what a willing purchaser would pay for AriZona,” Gravante said.
But Louis Solomon, a lawyer for Vultaggio, countered the company was worth just $426 million, saying the offers weren’t binding and the billion dollar ranges were “fantasy.”
“They are worth nothing,” he said. “Zero.”
He also argued the judge should subtract $249 million from whatever is awarded to Ferolito and a trust for his son because of conduct that hurt the beverage maker.
Privately held Beverage Marketing and its related companies have 1,000 employees and annual sales of $1 billion, Solomon has said.
The non-jury trial, before state Supreme Court Justice Timothy Driscoll, follows six years of litigation between Ferolito and Vultaggio, both of whom launched AriZona in 1992.
The men later agreed to restrict the transfer of company stock to outsiders. But by 2005, Ferolito wanted to sell his shares and began pushing for a corporate sale.
Unable to gain Vultaggio’s support, Ferolito went to court seeking a ruling that restrictions on his ability to sell were unenforceable.
After courts ruled against him, Ferolito filed a lawsuit seeking to dissolve Beverage Marketing. Vulaggio later elected under state law to buy out his partner.
Subsequent court rulings said Beverage Marketing itself could buy Ferolito’s stake. The trial now covers all AriZona entities.
Solomon has insisted that valuing the beverage maker at too high a price could result in insolvency. At trial, he urged Driscoll to ensure AriZona remains viable, saying Ferolito “wants to kill the company.”
While Ferolito’s lawyers says the company’s revenue is increasing, Solomon said it is facing declining margins as its business has matured.
“Even if they were going gangbusters, the company is not worth $4 billion,” he said.
But Gravante said experts hired by Ferolito valued the company at $3 billion. Tata and Nestle meanwhile are still interested in buying the AriZona companies, he said.
“We already know in this case what a willing purchaser would pay,” he said.
Representatives for Tata and Nestle did not respond to requests for comment.
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 Steve Orlofsky