UPDATE 5-Dole's 90-year-old CEO offers to take company private

Tue Jun 11, 2013 5:22pm EDT

* Offer of $12/shr a premium of 18 pct over Monday close

* Murdock already controls 40 pct of company

* Shares rise well above offer

* Dole CEO is 213th richest American, says Forbes (Adds analyst comments, company background, closing share price)

By Aditi Shrivastava and Pallavi Ail

June 11 (Reuters) - At an age when many 90-year-olds spend their time reminiscing about the past, Dole Food Co Inc 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 percent of one of the world's largest sellers of fresh fruit and vegetables, made an offer on Tuesday to buy the remaining 60 percent in a deal that values Dole at just over $1 billion.

Including debt, the deal gives the company an enterprise value of $1.5 billion.

Dole shares jumped 22.2 percent on Tuesday to close at $12.46, well above the offer price of $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 $33.50 per share in a deal that gave the company an enterprise value of $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 $14 and $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 percent of Dole and is its fourth-biggest shareholder. Murdock is the biggest.

As chairman of the board and CEO, 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 Inc , Best Buy Co Inc and American Greetings Corp .

"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 $9.46 per share, according to StarMine, a unit of Thomson Reuters. That is about 7 percent below the stock's Monday close and 21 percent 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.

BACK IN THE SADDLE

Murdock, who was already Dole's chairman, returned as CEO in February after David DeLorenzo left to run two businesses Dole sold to Japan's Itochu Corp.

A high school dropout who ran the company as CEO 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. (link.reuters.com/bar78t)

The 213th richest American - with a net worth of $2.4 billion, according to Forbes - Murdock was in the news last year when he sold his 98 percent ownership of Hawaii's sixth-largest island, Lanai, to Oracle Corp co-founder and CEO Larry Ellison for a reported $500 million.

His latest play follows the April sale of Dole's packaged foods and Asia fresh produce businesses to Itochu for $1.7 billion, shrinking the company's size by a third. Revenue in 2012 was $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 percent of its revenue comes from fresh fruit.

The company, like rival Chiquita Brands Inc, 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 $165 million.

Dole, which had $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 percent to Dole's closing stock price on Monday.

Prior to the bid, the stock had fallen 32.7 percent since touching a lifetime high of $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. (Additional reporting by Martinne Geller in New York; editing by Saumyadeb Chakrabarty, Ted Kerr and Matthew Lewis)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.