A New York Judge blasted estranged AriZona Beverages partner John M. Ferolito’s attempt to sell a portion of the jointly-held business to an investment group, ending a lawsuit that had briefly threatened the authority of company mastermind Domenick J. Vultaggio and keeping the original ownership structure intact.
In granting a motion from Vultaggio to throw out the case, New York Supreme Court Judge Martin J. Shulman said Ferolito’s attempt to break a deal intended to keep the partnership split evenly between Ferolito and Vultaggio – and their families – “borders on the unconscionable.”
Ferolito began an attempt to sell an initial 2 percent interest in Arizona Entities – a group of businesses that includes the eponymous iced tea company as well as a distributorship and bottling company, to private investor Patriarch Partners last August, and the parties went to court soon after. According to a deal signed by the two men in 1998, neither partner could transfer its ownership in the business to anyone but their family or to each other.
The court recognized that contract, which split the profits from the business equally between the two families, as a valid decision by a pair of “sophisticated business individuals.”
“Ferolito’s callous disregard of the explicit obligations he knowingly undertook could not be countenanced by the court even if his strained arguments had a valid basis, which they do not,” Shulman wrote.
Ferolito’s motivation for trying to break the contract can be easily understood in light of the amount of money he and his family stood to gain from the deal: according to court filings, Patriarch Partners had an option to purchase another 23 percent of the company for a total of $4.32 billion – an amount that put the total value of AriZona north of $17 billion.
At the time of the sale, it had long been understood that Ferolito’s interest in the company was on the wane, while Vultaggio’s leadership has only become reinforced with the addition of his sons, Wesley and Spencer, to AriZona’s day-to-day operational management.