An investment firm abruptly submarines a deal that would have seen the wine e-tailer sold to Liberty Media.
It looked like a done deal, according to the Mercury News. Wine.com, a web presence that has been up and down over the past few years, looked ready to be sold for substantially more than its current valuation.
A $67.5 million deal was on the table, and the company’s chairman and rescuer, Chris Kitze, looked ready to be partially rewarded for his efforts at reviving the company. Liberty Media’s offer carried a nice $24.5 million premium over Wine.com’s 2004 value. The saga of trying to navigate the Byzantine world of online wine sales would close on a happy note.
Not so fast.
“My job is to be the CEO,” George Garrick told the Merc. “I can’t do that job if a single controlling shareholder is going to use their voting rights to further their own interests at the expense of other shareholders by unilaterally overruling decisions that the Board and the Management Team have made.”
That shareholder was Baker Capital, which is part of Wine.com’s board and spearheaded $20 million in venture capital funding for the company in 2004. They possessed enough votes to block the deal, and allegedly did so with the help of two other board members. Further, the article alleges Baker Capital compelled other shareholders to agree to invest more money in Wine.com, under threat of bankruptcy.
The end result has seen Mr. Garrick leave the company, and Wine.com drop to a $35 million valuation, now controlled by Baker Capital. That equals a 65 percent stake, a potential for a bigger payoff for Baker Capital should Liberty Media or another suitor buy the company.
Business can be rewarding, and it can be ruthless. Just ask Chris Kitze.
David Utter is a staff writer for murdok covering technology and business. Email him here.
