A court clerk confirmed the Setrakian Family Trust — which holds Dole shares — filed the case against the Westlake Village, Calif.-based fresh produce company’s board in the Delaware Court of Chancery in Wilmington, Del., on June 14. She said it had not been assigned to a judge as of late June 17.
The case claims the Dole board of directors will be violating their legal obligation to get the best price possible if they accept Murdock’s offer of $12 per share, according to reports from Bloomberg News. The shareholders also contend the board is not seeking other offers.
Murdock’s bid shortchanges stockholders, providing only $645 million cash even though the bid is for $1.1 billion, according to the Bloomberg report.
David MurdockIn his offer, Murdock said he would assume Dole’s debt, according to documents filed with the Securities and Exchange Commission on June 10. He also said if an agreement has not been executed by July 31 he will withdraw his offer, according to the SEC filing.
Murdock also specified in his offer that he expects the Dole board to appoint a special committee of independent directors to consider his proposal. The board issued a statement saying they would take that course of action.
“I will not move forward with the transaction unless it is approved by such a committee,” Murdock’s offer states. “In addition, the transaction will be subject to a non-waivable condition requiring the approval of a majority of the shares of the company not owned by me or my affiliates.”
An analyst writing for The New York Times observed that Murdock’s conditions of sale reflect more than an attempt to meet best practices.
Analyst Steven Davidoff reported recent changes in merger and acquisitions legal philosophies, especially for companies such as Dole that are incorporated in Delaware, have spurred the development of the language used in Murdock’s offer.
The clause is an attempt to skirt under the standard that requires heightened scrutiny of so-called freeze-out transactions by corporate management, Davidoff wrote. Application of the heightened standard means the Delaware courts will closely review the Dole deal for fair price and fair dealing, according to Davidoff’s column.