AriZona owners locked in legal stalemate

The co-owners of Woodbury-based AriZona Iced Tea companies were locked in a legal stalemate Friday after the rejection earlier this week of a $2 billion offer for half the company.

The court case before Justice Timothy Driscoll in Nassau County Supreme Court, underway since May, is designed to place a value on the closely held company, maker of iced teas and soft drinks.

The company is owned by co-founders John Ferolito and Domenick Vultaggio. Under a 1998 agreement, Ferolito moved to Florida while Vultaggio oversaw daily operations.

Driscoll is conducting the trial to determine the price Vultaggio and associated companies must pay for the stake of Ferolito and a family trust.

Testimony Friday underlined the acrimonious relationship between the founders. David Menashi, chief executive of Beverage Marketing USA, charged that as early as 2008, Ferolito was sowing discord at the company by talking to employees about a possible sale.

In the summer of 2008, Menashi said, celebrity private detective Richard "Bo" Dietl and four "very large people in sunglasses" planted themselves in the company's executive offices, then in Lake Success. Dietl, a former New York Police Department detective, said that he was there to enforce Ferolito's rights, according to Menashi.

Earlier in the week, co-founder John Ferolito, in a letter dated June 22, made the $2 billion offer to buy out Vultaggio. Vultaggio rejected the proposal; his lawyer, Louis Solomon, said the offer was merely an effort "to influence the court."

Vultaggio previously testified that 50 percent of the company would be worth $100 million to $130 million, the letter said, far less than the $2 billion Ferolito was offering.

Nicholas Gravante, an attorney for Ferolito, said that a company valuation of $4 billion -- as implied by Ferolito's offer of $2 billion for half the company -- is "a steal" because suitors, including hedge funds, private equity firms and rival beverage companies Tata Global Beverages Ltd., Nestle SA and Coca-Cola Co. are clamoring to buy the company for even more money.

"Today it would be worth $6 billion to $7 billion in an auction," he said.

The trial is based on the value several years ago when Ferolito filed a lawsuit to dissolve Beverage Marketing USA, one of several entities related to AriZona. Complicating a deal is that in 1998, Ferolito and Vultaggio agreed to restrict a stock sale to outsiders.