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A New York court has ordered Evercore to reveal who had access to a confidential document the investment bank posted in an electronic data room, the secrecy of which Arizona Beverages said was essential to maintaining the 99 cent pricing of its “Big Can” iced tea.
Arizona initiated legal proceedings against Evercore this spring, accusing the boutique firm of wrongfully uploading a secret supply agreement between the upstate New York-based tea maker and its can supplier, Vobev, which Evercore had been hired to sell.
Arizona, known for its 24-oz cans of iced tea emblazoned with a 99 cent label, has maintained the pricing for about 30 years. “AriZona’s 99¢ ‘Big Can’ is synonymous with the company, becoming the defining, if not legendary, part of Americana itself,” Arizona’s lawyers said in New York state court filings.
“The supply of 24 oz. cans at competitive pricing is the life blood of AriZona’s Big Can business and its ability to maintain the 99 cent price which consumers associate with the product in this time of rampant inflation,” Arizona’s lawyers added.
Evercore on Tuesday was ordered to turn over records to Arizona revealing which parties had access to the agreement via the data room, according to a court order. The decision marks a rare case where an investment bank has been asked to disclose the identities of potential bidders. Sellers and bidders are typically bound by confidentiality agreements to not use information gathered for any purpose other than bidding.
Court documents show Evercore was retained to sell Salt Lake City, Utah-based Vobev in a process that has not been previously reported. One of Vobev’s customers is privately held Arizona, founded by Don Vultaggio in Brooklyn in 1992, who is now a billionaire.
A supply agreement between Vobev and its customer was subject to a confidentiality provision and could only be shared with outside parties if both Vobev and Arizona agreed, according to Arizona. Still, Evercore said that after instruction by Vobev, in January it uploaded the document into a data room where an unnamed third party that signed a non-disclosure agreement had access.
That upload would eventually spark a flurry of emails from Vultaggio to Evercore’s chair and chief executive John Weinberg and the bank’s general counsel, accusing Evercore of allowing the supply agreement to make its way to $19bn can supplier Ball Corp, Arizona’s other major supplier and a previous client of Evercore. Arizona has hinted in court filings that its relationships with its can suppliers have recently deteriorated. The beverage company also recently won a $14mn arbitration with Ball over a can supply dispute.
“If AriZona is unable to obtain Big Cans for distribution on the West Coast at the contracted price under its Can Supply Agreement with Vobev, AriZona will suffer millions in damages and Ball will gain enormous leverage over the supply of Big Cans to AriZona, especially if Vobev is sold to Ball,” Arizona later wrote in a court action seeking to uncover the parties that had seen the confidential document.
Evercore denied it had shown the agreement to Ball and said its own confidentiality obligations rendered it unable to reveal the unnamed third party “A” that had entered the data room.
“Whatever the court finds regarding the disclosure of Party A’s identity, the deep sea fishing expedition that AriZona proposes should be rejected,” lawyers for Evercore said in filings.
The argument failed to sway a New York state judge. In a decision filed on Tuesday, Judge Bruce Cozzens directed Evercore to disclose to Arizona all individuals who accessed the data room or received a copy of the Vobev/Arizona supply contract.
“The court finds that Petitioner has brought forth sufficient information to confirm that the Can Supply Agreement is crucial to the Petitioner’s business,” Cozzens wrote. The judge then decided that the confidentiality breach required Evercore to reveal who had access to the data room.
An Evercore investment banker was also ordered to appear for a deposition over the Vobev data room procedures within 10 days, the filings show.
The episode shows the tightrope bankers and lawyers for companies up for sale must walk between sharing details that will give bidders confidence and giving away otherwise secret business practices.
A spokesperson for Evercore declined to comment. A representative for Arizona did not respond to a request for comment. A spokesperson for Ball said they could not comment on pending litigation, adding: “We look at everything that comes to market, and we are happy with our current footprint.”
