Gates’ Firm Supports Murdock in Plan to Buy Castle & Cooke

The personal investment firm of Microsoft founder Bill Gates has voted in favor of a controversial plan by Castle & Cooke Chairman David Murdock to buy the company, the Los Angeles-based real-estate firm said Tuesday.

Gates’ Cascade Investment, which revealed Monday that it holds a 6.3% stake in Castle & Cooke, has tendered its shares in support of Murdock’s proposal to buy the firm in a deal valued at $615 million, said Dean Estrada, a Castle & Cooke spokesman.

Flexi-Van Leasing Inc., the private firm through which Murdock is mounting his buyout offer, previously announced that holders of 7.1 million Castle & Cooke shares have agreed to Murdock’s offer.

The roughly 1.07 million shares controlled by Cascade are part of the 7.1 million, Estrada said Tuesday. Murdock must collect 2.3 million more shares to reach his goal of controlling 75% of the Castle & Cooke shares that he doesn’t already own. Shareholders have until Friday to tender their shares.

Some dissident shareholders oppose Murdock’s bid, saying he has offered far too little for the firm’s real estate, which includes the Hawaiian island of Lanai where Gates was married six years ago.

Several holders of large blocks of Castle & Cooke stock have said they plan to keep their shares and use Hawaiian securities law to force a court-supervised appraisal of the firm, which could force Murdock to pay them a higher price.

Castle & Cooke was unaware of Gates’ ownership of its shares until Cascade made the disclosure in a federal filing Monday, Estrada said. Castle & Cooke then contacted Cascade about its intentions, and was told that Cascade had tendered its shares in support of Murdock’s plan late last week, he said.

Castle & Cooke doesn’t know when Cascade bought its shares, Estrada said. Cascade officials did not return a phone call Tuesday.

Castle & Cooke’s stock closed at $19.38, up 19 cents, on a second straight day of heavy trading on the New York Stock Exchange.

Murdock is offering $19.25 a share to buy Castle & Cooke. He has raised the offer twice. i Gates’ decision to tender indicates he made the investment solely as a favor to Murdock, said Craig Silvers, a Sutro & Co. analyst.

However, it also shows the degree to which other shareholders oppose Murdock, he said. Together, Murdock and Gates hold more than 5.69 million shares, or about four-fifths of the 7.1 million shares pledged in support of the buyout plan. “It says a lot of people don’t like [Murdock’s] bid,” Silvers said.

Silvers believes Gates established his stake in the last two weeks, in some cases paying slightly higher prices than the $19.25 bid by Murdock.