Dole Given Deadline to Accept CEO’s Bid
David H. Murdock, chairman and chief executive of Dole Foods Inc., has set Wednesday as the deadline for the world’s largest producer of fresh fruits and vegetables to accept his offer for the three-quarters of the company he doesn’t already own.
Murdock has offered to buy 76% of the Westlake Village-based company for about $2.3 billion. His offer of $29.50 a share has been rejected by Dole’s board as too low, but negotiations are continuing. The deal also would include Murdock assuming about $1 billion of the company’s debt.
If successful, the deal would give Murdock sole control of Dole, freeing him from having to satisfy profit-hungry shareholders and curry favor with Wall Street analysts.
“I don’t think he likes outside involvement,” said Heather Jones, an analyst with BB&T; Capital Markets. “He’s the epitome of the self-made man. He has always done things the way he wants to do them. He’s 79 years old, and he doesn’t want to change things now.”
Since Murdock first made the bid in September, no competing offers have surfaced. Dole’s two main competitors, Chiquita Brands and Fresh Del Monte Produce Inc., probably would face stiff regulatory opposition in the United States and Europe if they tried to combine with Dole. The deadline for Murdock’s bid has been extended twice.
Sole control would give the self-made billionaire the ability to transfer cash from Dole to his other business ventures, something that’s prohibited as long as Dole remains public.
Murdock did not respond to requests for an interview about the deal.
Dole’s languishing stock has been trading below Murdock’s offer. Still, analysts believe Murdock will have to raise his bid to about $34 per share to satisfy stockholders. On Friday, Dole shares closed at $28.98 on the New York Stock Exchange.
“Given the recent increased scrutiny of boards and CEOs, we believe Murdock may have to increase his bid, as his offer clearly benefits one large shareholder to the detriment of remaining investors,” Jones wrote in a September report.
Alexander Roepers, a vocal critic of the deal whose Atlantic Investment Management Inc. owns 6% of Dole shares, says the stock has been hurt by the “Murdock discount” -- an impression that he has run Dole as a quasi-private company without due regard for investors.
Dole, for instance, does not actively court financial analysts, preferring to keep a low profile on Wall Street. A more aggressive effort to tout the company could result in more demand for the stock and more profits for investors, Roepers said.
A key question for investors is whether Dole’s shares will climb on their own in the coming months, making it wiser to wait rather than accept Murdock’s offer.
In recent years, Dole has bounced back from a number of problems, including a worldwide banana glut, Hurricane Mitch and severe freezes that hurt crops in California. The company has become a leader in the packaged-salad business, which has surged as consumers seek convenient, healthy foods.
Such moves have helped bolster the bottom line. In the most recent quarter, Dole reported net income of $14.7 million, compared with a net loss of $94.8 million in the same quarter last year.
For the first nine months of 2002, Dole reported net income of $137.8 million, compared with a net loss of $23.1 million for the first nine months of 2001.
