Amid a flurry of activity at Robert Mondavi Corp. today, Michael Mondavi resigned from the publicly traded company, which then announced that it would explore divesting itself of its luxury brands, such as Robert Mondavi Winery, Opus One and Ornellaia.
That would leave Robert Mondavi Corp. to focus entirely on lower-priced, large-production brands such as Woodbridge, Robert Mondavi Private Selection and La Famiglia from California, as well as Kirralaa from Australia and new brands, for which the company sees greater growth potential and higher financial returns.
But the company's announcement late this evening left many questions unanswered, including whether the Mondavi family members might try to acquire their original Robert Mondavi Winery in Napa Valley. In its statement, the company declined to speculate if the luxury brands might be sold to family members -- who are the company's most powerful shareholders -- or in some instances sold back to the joint-venture partners. One source said a "strategic review" is underway, with all options being considered. Other sources indicated that some family members and partners were scrambling to come up with funds to make the acquisitions.
The holdings that the company may shed include Robert Mondavi Winery and its vineyards, the Byron and Arrowood wineries and vineyards in California, and the company's 50-percent interests in Opus One in Napa Valley, Viña Seña in Chile and Ornellaia and Luce della Vite in Italy. Mondavi's partners in these ventures are, respectively, Philippine de Rothschild of Bordeaux's Château Mouton-Rothschild, the Errazuriz family of Chile and the Frescobaldi family of Tuscany. (Earlier this year, the company sold its stake in Chile's Viña Caliterra back to Errazuriz.)
None of the principals involved in the announcement, including Michael Mondavi or chairman Ted Hall, were available for comment.
Michael Mondavi's resignation, which was announced to company employees in Napa Valley today, came eight months after he stepped down as chairman, and was replaced by Hall, 55. Mondavi, 60, subsequently went on a seven-month sabbatical from the winery. He recently returned and has started his own winery, along with his wife, Isabel, and his son, Rob. It is tentatively called I'M, for Isabel and Michael. They have already produced a 2003 Rosé of Cabernet from Napa Valley.
While Michael will no longer be a vice chairman and an officer of the company, he will continue to serve as a director of the board. His brother, Tim, remains a vice chairman for the time being.
Michael was chairman for three years and had worked at Robert Mondavi Winery since 1966, when he helped his father, Robert, start the company, which became one of California's most-recognized brands. Robert, an icon in the California wine world is now 91 and has not been involved in the company's day-to-day operations since 1990, when he turned the reins over to Michael and Tim. The company went public in 1993 and then expanded ambitiously.
But in the past several years, Robert Mondavi Corp. has faced a turbulent wine market and has undergone several reorganizations. In 2003, Tim, who oversees winemaking, took a six-month sabbatical. When Hall, a former McKinsey & Co. executive, became chairman this past January, it marked the first time in the company's 38-year history that a Mondavi family member was not at the head of it.
In August, the Mondavi family announced that it planned to give up majority control of the company in a restructuring plan, sparking rumors that all or part of the business might be sold. The company denied that it was preparing for a possible sale, though the restructuring called for it to divide into two businesses, one focusing on brands priced at $15 and less and another on the high-end labels, such as Robert Mondavi and Opus One.
Originally the company said it was looking for someone to head the luxury division; today's statement said it was looking only for a managing director for Robert Mondavi Winery, which seems to indicate that that portion of the business will be separated from some of the other high-end brands. Layoffs are expected as part of the reorganization.
The August restructuring plan, which shareholders will vote on at the end of October, would reincorporate the Oakville, Calif.-based company in Delaware and shift the Mondavi family's voting power from an 85 percent controlling interest to just less than 40 percent. However, the family would remain the largest shareholders in the company.
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