Mondavi Corp. plan to sell luxury brands may settle family dispute

Winemaker's sons feuding over direction of company

September 16, 2004|By SAN FRANCISCO CHRONICLE

SAN FRANCISCO - In the latest act of Napa Valley's continuing family saga, Robert Mondavi Corp. said late Tuesday that it plans to sell its luxury wine brands, including the original Robert Mondavi Winery that made the company famous.

The move might resolve the long-simmering dispute between Robert Mondavi's sons, Michael and Timothy, over the direction of the company their father founded in 1966 after a fight with his brother, Peter.

Layoffs are expected in both the luxury- and supermarket-wine sectors of the Oakville, Calif., corporation, according to a company press release.

After taking a seven-month sabbatical, Michael Mondavi resigned as vice chairman of the corporation Tuesday to pursue personal interests, according to a statement, though he will continue to sit on its board of directors. He and his wife recently trademarked their own wine brand, IM.

Timothy Mondavi is staying as vice chairman and winegrower for the corporation.

Robert Mondavi Corp. owns several famous and expensive luxury wine brands, including Robert Mondavi Winery and joint venture businesses Opus One and Ornellaia.

In 1978, the company moved onto supermarket shelves by buying the now-ubiquitous Woodbridge brand.

It also makes the supermarket brand Robert Mondavi Private Selection, which some observers feel weakens the image of the Robert Mondavi trademark.

The publicly traded corporation will focus on what it calls lifestyle wines, including Woodbridge, Robert Mondavi Private Selection and La Famiglia, and sell the luxury brands such as Opus One.

The company plans to work with the buyers of the Robert Mondavi Winery to create and co-own an entity that would own the Robert Mondavi trademark and would license it back to both companies for a royalty fee. No timetable was set for the sale.

Many have speculated that Mondavi family members may purchase some of the luxury brands put up for sale by the corporation, particularly the flagship Robert Mondavi Winery brand.

A corporate restructuring last month cut the voting power of the Mondavi family's shares to 39.5 percent from 84 percent in a stock swap that appeared to presage the splitting of the company.

The breakup is reminiscent of the rift between Robert Mondavi, now 91, and his brother Peter over the Charles Krug Winery, which their father, Cesare Mondavi, bought for $87,000 in 1943.

Peter Mondavi was supposed to be winemaker and Robert was to handle sales, but both criticized the other's focus.

Robert Mondavi left Krug to form his own quality-oriented company at a time when most California wineries concentrated on cheap jug wines.

The family dispute over Robert Mondavi's shares in Krug ended up in court, with a ruling in Robert Mondavi's favor in 1976.

The corporation said that it is actively searching for a managing director for Robert Mondavi Winery and that its luxury brands will be managed until their sale by Greg Brady, senior vice president for business development.

The corporation also said it expects to incur up to $200 million in pretax charges from the restructuring, to be detailed when it reports its fiscal first-quarter earnings.

The statement came after the close of the stock market Tuesday.

Robert Mondavi Corp.'s shares tumbled $2.93, or 6.9 percent, to close at $39.66 in Nasdaq stock market trading yesterday.

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