US: Mondavi receives takeover proposal

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The California winemaker The Robert Mondavi Corporation said it has received an unsolicited proposal to acquire the company subject to certain terms and conditions.

The proposal was reviewed by the company's Board of Directors which concluded not to reject the proposal but to consider it as part of its on-going process to maximize value for all of its shareholders. The Board did, however, decline a request in the proposal to suspend implementation of its previously announced recapitalization plan.

The company said it had reaffirmed its intent to seek shareholder approval, at the Annual Meeting, for its recapitalization plan which transfers the company's domicile to Delaware and converts its two class equity structure, where the Mondavi family Class B shareholders have 10 votes per share and the Class A shareholders have one vote per share, into a single class of shareholders with equal voting rights. That shareholder vote is scheduled to take place on November 30, 2004.
"We remain fully committed to a process that maximizes value to our shareholders," said chairman Ted Hall. "We believe strongly that our proposed recapitalization plan is important to achieving full value for our shareholders and that our shareholders are best served by exercising their rights in a 'one share, one vote' structure. Therefore, we intend to proceed with our previously announced plan to recapitalize the company and incorporate in Delaware while continuing to carefully evaluate all strategic options. We will be able to effectively act upon all of our options following the approval of the recapitalization plan at our upcoming annual meeting of shareholders," Hall added.

Last month, Mondavi announced strategic plan to focus entirely on the premium and super-premium lifestyle wine segments, to divest its luxury wine and other non-strategic assets and investments for estimated net after-tax proceeds of US$400m to US$500m within one year, providing the company with financial flexibility to pursue value-enhancing strategic and financial opportunities.

"Given our in-depth knowledge of the luxury assets and the complex nature of our joint venture arrangements, we believe we are uniquely qualified to seek the highest value from these assets," said CEO Greg Evans. The estimated proceeds from asset divestitures assume all such assets can be sold under current wine industry and general economic conditions.

The company has stated that it believes that successful implementation of this strategic course will enable it to generate, from the revised fiscal 2005 base, earnings before interest and tax ratios of approximately 20% and financial returns in excess of 12% within five years.

"We will continue to evaluate our current and projected performance and explore vigorously the options and alternatives for each of our businesses, and for the company as a whole, in pursuit of maximum shareholder value," said Hall.

Sectors: Wine

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