Tech billionaire Larry Ellison, already well-known for his extravagance, will soon own another exotic trophy — a Hawaiian island.
Ellison, the founder of Oracle Corp., has agreed to buy 98% of the island of Lanai from David Murdock, a Los Angeles billionaire who controls Dole Food Co. and many other businesses under Castle & Cooke Inc.
Lanai, the sixth-largest Hawaiian island at 141 square miles, was once a pineapple plantation and is still sparsely inhabited. According to documents filed with Hawaii's Public Utilities Commission, the purchase will include two resort hotels and two golf courses with clubhouses.
The sale price has not been disclosed, but local observers value the deal at more than $500 million. That's a large real estate transaction by any standard, though not earth-shattering in the realm of trades among wealthy investors.
Ellison, the third-richest American with a net worth of $36 billion, according to Forbes, has spent hundreds of millions of dollars on trophy properties in Malibu, Lake Tahoe, Rancho Mirage and other locations where real estate prices are consistently high.
His former yacht "Rising Sun" reportedly cost more than $200 million to build and at a length of 254 feet is too big to dock at most of the world's marinas.
Such indifference toward expenses may come in handy as owner of Lanai. The island's business balance sheet was redacted in the PUC filing but has been a money-losing operation for Murdock, who shut down pineapple farming there in favor of resort development.
"Seller has sustained substantial losses with respect to Lanai's operations and assets," including the operation of the two resorts, which are managed by the Four Seasons chain, Castle & Cooke said in its filing.
The company urged the utilities commission to rapidly give interim approval of the transaction, which involves regulated water and transportation utilities, because "while seller has continued to fund shortfalls in order to mitigate negative impacts to the Lanai economy and employment for residents, seller can no longer sustain this."
Murdock got control of the scenic isle with his 1985 acquisition of Castle & Cooke. The state of Hawaii owns 2% of Lanai, which is home to about 3,100 people.
The picturesque island is known for its slow and quiet pace. Only 30 miles of Lanai's roads are paved, and four-wheel-drive vehicles are needed to take in all of the sights. It can be reached by airplane or ferry.
Microsoft Corp. founder Bill Gates retreated to Lanai for his 1994 wedding to the former Melinda French, and Castle & Cooke was able to mostly seal off the island from unwanted guests, especially the media.
Murdock said he would keep his home on Lanai and the right to build a wind farm. The wind farm, the Associated Press said, has been a contentious project that would place windmills on as many as 20 square miles of the island and deliver power to the island of Oahu through an undersea cable.
Ellison plans to pay cash, and the deal should result in new jobs, economic stimulus and a reinvigorated local tourism industry, Castle & Cooke said in the PUC documents.
"The buyer anticipates making substantial investments in Lanai and is looking forward to partnering with the people of Lanai to chart the island's future," Castle & Cooke said.
Murdock said in a statement that selling Lanai was not an impulsive decision and that he has been looking for a buyer who would have the right enthusiasm, commitment and respect for the island's residents.
"I believe Larry Ellison will bring a new and fresh perspective to the island and its people," Murdock said.
Hawaii Gov. Neil Abercrombie said Ellison, 67, has had a long-standing interest in the island.
"We look forward to welcoming Mr. Ellison in the near future," Abercrombie said. "His passion for nature, particularly the ocean, is well-known, specifically in the realm of America's Cup sailing."
If the PUC approves the sale as expected, Ellison will join the ranks of other rich and famous people who have acquired islands of their own.
Actor and director Mel Gibson shipped an eight-lane bowling alley to his private island of Mago in Fiji in 2006. Actor Johnny Depp, who earned millions of dollars playing the role of pirate Jack Sparrow, paid about $3.6 million for an island in the Bahamas called Little Halls Pond Cay in 2004.
When Bjorn Borg was considered the best tennis player in the world in 1979, he owned a group of 11 islands in the Baltic Sea off the east coast of his native Sweden.
Last year Murdock closed the Regency Club, a members-only private dining club that had operated since 1981 in the penthouse of the Westwood office building that houses his corporate headquarters.
Murdock said club membership had gradually declined in recent years and he believed that "after 30 years, it is perhaps time to make space for a new generation."
The sentiment was similar to another statement the 89-year-old made about his sale of Lanai:
"I have learned in life that change is inevitable," Murdock said, "and can be quite positive when guided in the right direction."