Castle & Cooke Finds Merger Partner: Flexi-Van
Castle & Cooke Inc., rich in real estate but poor in cash, said Tuesday that it had agreed on a merger plan with Flexi-Van Corp., a New York-based firm headed by Los Angeles investor-developer David H. Murdock.
The merger would, among other things, grant Flexi-Van options to buy, under unspecified “events,” certain Castle ‘ Cooke land holdings for up to $300 million. Much of the Honolulu-based company’s real estate is in Hawaii.
Murdock, who owns 33% of Flexi-Van and serves as its chairman and chief executive, would assume the same posts at Castle & Cooke, whose chief executive, R.D. Cook, would remain as its president while becoming chief operating officer.
A statement issued by Murdock and Cook described Murdock as “enthusiastic and optimistic” over the prospect of investing Flexi-Van’s “substantial cash flow in the attractive opportunity provided by Castle & Cooke businesses.”
Cook added that “the financial strength and substantial cash flow of Flexi-Van will significantly enhance Castle & Cooke’s ability to meet its current financial difficulties and reach satisfactory terms in the debt-renegotiation discussions currently under way with its banks.”
The plan calls for Flexi-Van to be merged into a new, wholly owned subsidiary of Castle & Cooke. each share of Flexi-Van common stock would be converted into 2.2 shares of Castle & Cooke common and 1.1 shares of a new series of voting, convertible preferred stock.
As a result of the merger, current Castle & Cooke stockholders would own 55% of the company’s stock. Flexi-Van stockholders would own 45%.
Under the plan, which is subject to approval by shareholders of the two companies as well as Castle & Cooke’s lenders and regulators. Flexi-Van would have an option to acquire up to 4.7 million shares of Castle & Cooke common stock for $11 a share in cash. Castle & Cooke has about 25.6 million shares outstanding.
In Tuesday’s trading on the New York Stock Exchange, Castle & Cooke common stock closed at $11.375, off 25 cents, and Flexi-Van closed at $30.75, unchanged.
Castle & Cooke had reported Friday that it was discussing a merger with another New York Stock Exchange company. Flexi-Van leases transportation equipment, mainly containers and chassis.
In the last two years, Flexi-Van trimmed its debt from more than $400 million to about $250 million, according to the statement.
It also sold off some lagging businesses and raised its earnings to $21 million last year from $14 million in 1983 while increasing cash flow to $82 million from $64 million.
On the other hand, Castle & Cooke, the nation’s largest producer of fresh fruits and vegetables--including Dole-brand pineapples and bananas--ended 1984 with debt totaling $468 million, including $258 million in private unsecured debt that it has been seeking to restructure.
It missed a March 1 interest payment on two series of securities that could become due and payable by the end of the month.
For the six months ended Dec. 29, 1984, the company recorded a net loss of $63.9 million on revenue of $784.6 million, compared to income of ‘$393,000 and revenue of $708.7 million a year earlier.
The joint statement by Murdock and Cook emphasized Murdock’s 37 years as a land developer through David H. Murdock Development Co.
He also wons Cannon Mills Co., a textile manufacturer, and has interests in a number of other businesses.
