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Reuters

At an age when many 90-year-olds spend their time reminiscing about the past, Dole Food chief executive David Murdock is revisiting it by trying to take the company private like he did 10 years ago.
The billionaire, who already owns 40 per cent of one of the world’s largest sellers of fresh fruit and vegetables, made an offer on Tuesday to buy the remaining 60 per cent in a deal that values Dole at just over US$1 billion (HK$7.76 billion).
Including debt, the deal gives the company an enterprise value of US$1.5 billion (HK$11.6 billion).
Dole shares jumped 22.2 per cent on Tuesday to close at US$12.46, well above the offer price of US$12 per share, suggesting that some investors expect a higher bid for the company, which sells bananas, pineapples, berries and packaged salads and has posted losses for the last three quarters.
Ten years ago, Murdock took Dole private for US$33.50 per share in a deal that gave the company an enterprise value of US$2.5 billion, though the company was much bigger then.
Analysts said Murdock may well have to raise his offer to clinch the deal, but that another bidder was unlikely.
“The industry is volatile and we believe that investment capital focus is likely elsewhere,” said BB&T Capital Markets analyst Brett Hundley, whose sum-of-the-parts analysis values Dole between US$14 and US$15 per share.
“It’s a good starting bid and it’s a sufficient bid to commence negotiations with the independent committee of the board,” said Roy Behren, managing member at Westchester Capital Management LLC, which owns 4.25 per cent of Dole and is its fourth-biggest shareholder. Murdock is the biggest.
As chairman of the board and chief executive, Murdock is very involved in the company’s strategic decisions, said a spokesman, but Michael Carter, Dole’s 70-year-old president and chief operating officer, handles the day-to-day operations.
The proposed deal for Dole, which traces its roots to Hawaiian pineapple plantations the mid-1800s, is the latest in a string of management-led bids, including ones for Dell, Best Buy Co and American Greetings.
“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, and apparently strong personal liquidity position,” Jonathan Feeney of Janney Capital markets said.
Dole’s intrinsic value is around US$9.46 per share, according to StarMine, a unit of Thomson Reuters. That is about 7 per cent below the stock’s Monday close and 21 per cent below Murdock’s offer. StarMine’s intrinsic value estimates the cumulative annual growth rate in the coming 10 years using a blend of its own models and analyst estimates.
Murdock, who was already Dole’s chairman, returned as chief executive in February after David DeLorenzo left to run two businesses Dole sold to Japan’s Itochu.
A high school dropout who ran the company as chief executive from 1985 until 2007, he took Dole private in 2003 and took it public as chairman in 2009 - the same year, according to a Forbes profile, that he finally earned his high school diploma.
Murdock, who made his fortune in real estate, picked up Dole when he took over its Hawaiian parent, Castle & Cooke, in 1985.
The nonagenarian told the New York Times in 2011 that he wanted to live to be 125, pinning his hopes on a strict diet, daily exercise and a lifestyle free of pills or supplements. He also admitted to a “dictatorial” streak. (http://link.reuters.com/bar78t)
The 213th richest American - with a net worth of US$2.4 billion, according to Forbes - Murdock was in the news last year when he sold his 98 per cent ownership of Hawaii’s sixth-largest island, Lanai, to Oracle co-founder and chief executive Larry Ellison for a reported US$500 million.
His latest play follows the April sale of Dole’s packaged foods and Asia fresh produce businesses to Itochu for US$1.7 billion, shrinking the company’s size by a third. Revenue last year was US$4.2 billion.
Dole is now left with its fruit and fresh vegetables business in North America and its fruit businesses in Latin America, Europe and Africa. About 70 per cent of its revenue comes from fresh fruit.
The company, like rival Chiquita Brands, has been struggling with volatile demand and low prices for bananas, its biggest-selling product. In addition, its strawberry business has suffered from swings in weather that have hurt earnings.
Dole’s shares fell sharply last month when the company announced that it had indefinitely suspended its share repurchase program, less than a month after announcing it, and would instead buy three new specially built refrigerated container ships for US$165 million.
Dole, which had US$101 million in cash on hand as of March, said it would set up a special committee of independent directors to consider Murdock’s offer, which represents a premium of about 18 per cent to Dole’s closing stock price on Monday.
Prior to the bid, the stock had fallen 32.7 per cent since touching a lifetime high of US$15.16 in September, when it struck the deal with Itochu.
Murdock said Deutsche Bank would advise on the transaction and that he had received a “highly confident” letter from the lender on the financing for the deal.


Dole’s 90-year-old boss offers to take company private

Genaro Saporito (left) works at the post that handles Dole Foods, on the floor of the New York Stock Exchange. Dole’s chief executive and chairman and family offered to buy the business on Tuesday. Photo: AP

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