July 2, 2015 / 7:56 PM / 4 years ago

Investors tell court they were shortchanged $1 bln in Dole deal

WILMINGTON, Del (Reuters) - Former shareholders of Dole Food Co pressed a Delaware judge on Thursday to award them a judgment of more than $1 billion for what they claim was a lowball buyout of the company in 2013 by its chief executive, David Murdock.

If Court of Chancery Judge Travis Laster adopts the shareholders reasoning, it could result in one of the largest judgments in a lawsuit over a buyout deal.

Murdock, 92, bought the Westlake Village, California-based banana importer in 2013 for $13.50 per share or about $1.2 billion, four years after taking Dole public. The IPO left the billionaire with a 40 percent stake.

While stockholders approved the Dole deal by a razor-thin margin, union pension funds filed a class action on behalf of shareholders in 2013, claiming the sale process was unfair.

Several hedge funds also sought to have their Dole shares appraised, which allows the Delaware court to determine a fair value for the stock.

Murdock, who attended Thursday’s closing arguments, dropped out of high school and rode his investing acumen to one of America’s biggest fortunes. He has said that he overpaid for Dole, and that the sale process was fair.

Murdock declined to comment.

Thursday’s hearing largely reviewed evidence presented at a two-week trial earlier this year.

Shareholder attorneys urged Laster, who said little during the hearing, to find Dole shareholders should have been paid more than $25 per share. They said evidence showed Murdock and top executives, aided by Deutsche Bank, drove down the value of Dole to a level at which Murdock could afford to take it private.

Dole attorneys said the stock may have been worth as little as $9.50. “Mr. Murdock delivered a gift to shareholders,” said Dole attorney Bruce Silverstein.

He argued that the investors were cherry-picking evidence that was never supported by witness testimony, and downplayed rambling testimony by Murdock earlier this year.

“He was clearly confused on the witness stand,” said Silverstein.

Deutsche Bank could face potential damages if found to have a conflict of interest by Laster, who has a reputation for being demanding of investment bankers.

Grant, the shareholder attorney, focused on the bank’s role as an advisor to Dole prior to the buyout, and then for Murdock in the going-private transaction. An attorney for the bank said its advisors were clearly working for Murdock and had not aided any potential breach of duties to Dole shareholders.

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