Dole’s CEO Offers To Take Company Private

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Dole’s CEO Offers To Take Company Private

Ninety-year old Dole Food Company, Inc. chief executive David Murdock plans to take the company private.  Murdock made the offer on Tuesday in a deal that values the company at just over $1 billion.  He already owns 40 percent of one of the world’s largest producers and marketers of fruit and fresh vegetables.

The company has posted losses for the last three quarters.  However, its shares jumped 22 percent to $12.44.  This is more than the offer price of $12 per share, which suggests that some investors expect a higher bid for the company.

According to analysts, Murdock might have to increase his offer in order to close the deal, but they don’t expect another bidder.  Murdock is the largest Dole shareholder. Westchester Capital Management, LLC owns 4.25 percent of Dole and is its fourth largest shareholder.  Roy Behren, managing member at Westchester Capital said, “It’s a good starting bid and it’s a sufficient bid to commence negotiations with the independent committee of the board.” 

Jonathan Feeney with Janney capital markets said, “We see this proposed offer as an attractive transaction that is likely to proceed at or relatively close to this price level, especially given Murdock’s strong ownership position, CEO role, chairman, and apparently strong personal liquidity position.”

According to StarMine, the unit of Thomson Reuters, Dole’s intrinsic value is approximately $9.46 per share.  This is close to 7 percent below the Monday’s close and 21 percent below what Murdock offered. 

Murdock returned as CEO in February when David DeLorenzo left to run two businesses that Dole sold to Japan’s Itochu Corp.  Murdock was a high school dropout who made his money in real estate.  He became Dole’s CEO in 1985 when he purchased its Hawaiian parent Castle & Cooke.  He was Dole’s CEO from 1985 until 2007.  In 2009, he took the company public.  According to a Forbes profile, he earned his high school diploma in 2009 as well.

Also according to Forbes, he’s the 213th richest American.  His network this $2.4 billion.  Last year, he sold his 98 percent ownership of Hawaii’s Lanai Island to Oracle Corp. cofounder and CEO Larry Ellison.

After selling the company’s package foods and Asia fresh produce businesses to Itochu four $1.7 billion, Dole now has its North American fruit and fresh vegetables business, and its fruit businesses in Latin America, Europe and Africa.  Approximately 70 percent of Dole’s revenue comes from fresh fruit.

Murdock confirmed that Deautsche Bank will be handling the transaction and that he received a “highly confident” letter from the bank about financing the deal.

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