Stone Creek Vineyards Analysis
March, 2002
STONE CREEK VINEYARDS
2000
“If you accept my offer of $11 million dollars, the employment agreement will allow you and your sister to remain as managers for the next ten years. You will be able to continue to define the styles and tastes of Stone Creek’s red and white table wines, just as you have been doing for the last 9 years and you will be able to implement plans for developing and expanding these brands throughout the United States. Yet, you will be relieved of ownership and financing responsibilities. Together we will continue to build our brands, expand our production and distribution, and move towards producing fine wines for the higher end of the premium market segment.”
This was the essence of the proposal made by Mr. Arthur Malone and a small group of investors to Sally and Nancy Stone, majority owners of Stone Creek Vineyards. He had contacted the Stones after hearing from a mutual acquaintance that they were interested in exploring financial options due to the tremendous success of their recent vintages. Selling these wine operations was an option that had been discussed over the dinner table in Sally Stone’s house for the last few years, but it was always eliminated when final decisions were made, especially after talking to Sally’s sister, Nancy, minority owner of the remainder of the firm.
The timing of Mr. Malone’s proposal came just after everyone at Stone Creek had participated in the harvest of 1999. From mid-September throughout the month of October, every available employee worked long hours to ensure that the grapes were picked at just the right time, carefully transported to the winery, and crushed at their peak of flavor. The result was a record harvest, in terms of volume, and the Stone sisters had every reason to be pleased after another excellent growing season. Although they were physically exhausted, they were also quite optimistic about the quality of this year’s products and continued acceptance of their wines
STONE CREEK VINEYARDS
2000
“If you accept my offer of $11 million dollars, the employment agreement will allow you and your sister to remain as managers for the next ten years. You will be able to continue to define the styles and tastes of Stone Creek’s red and white table wines, just as you have been doing for the last 9 years and you will be able to implement plans for developing and expanding these brands throughout the United States. Yet, you will be relieved of ownership and financing responsibilities. Together we will continue to build our brands, expand our production and distribution, and move towards producing fine wines for the higher end of the premium market segment.”
This was the essence of the proposal made by Mr. Arthur Malone and a small group of investors to Sally and Nancy Stone, majority owners of Stone Creek Vineyards. He had contacted the Stones after hearing from a mutual acquaintance that they were interested in exploring financial options due to the tremendous success of their recent vintages. Selling these wine operations was an option that had been discussed over the dinner table in Sally Stone’s house for the last few years, but it was always eliminated when final decisions were made, especially after talking to Sally’s sister, Nancy, minority owner of the remainder of the firm.
The timing of Mr. Malone’s proposal came just after everyone at Stone Creek had participated in the harvest of 1999. From mid-September throughout the month of October, every available employee worked long hours to ensure that the grapes were picked at just the right time, carefully transported to the winery, and crushed at their peak of flavor. The result was a record harvest, in terms of volume, and the Stone sisters had every reason to be pleased after another excellent growing season. Although they were physically exhausted, they were also quite optimistic about the quality of this year’s products and continued acceptance of their wines