For additional background, please see "Dole board unanimously agrees to sell to Murdock"
A dozen civil suits are challenging the deal, but David Murdock’s plan to buy Dole Food Co. Inc. appears to be headed for closure by year’s end, with a stockholder vote scheduled for Halloween.
The president and chief executive officer of Dole, Murdock was reportedly scheduled to meet with lenders Oct. 9 to discuss a $675 million, seven-year term loan that is part of his $1.15 billion offer, according to Bloomberg News.
Murdock, 90, made an unsolicited bid June 10 to buy back the Westlake Village, Calif.-based company. He bought it the first time in 2003 and took it back to public status in 2009. This time he offered $12 per share.
A special committee appointed by Dole’s board negotiated Murdock’s offer up to $13.50 per share. The full Dole board, with Murdock abstaining, unanimously voted to recommend stockholders accept the offer.
“The special committee held more than a dozen meetings following receipt of the proposal,” according to information Dole filed with the Securities and Exchange Commission and sent to stockholders in an Oct. 2 proxy statement.
The board’s filing includes several pages of points describing why the deal is good and why stockholders could lose money if they don’t OK it. But the bottom line is the bottom line in the recommendation supporting the buyout, referred to as a merger.
“The per-share cash merger consideration and the merger were likely to be more favorable to Dole’s unaffiliated stockholders than the value likely to be realized from other alternatives available to Dole, including remaining a public company and pursuing the current strategic plan,” according to the definitive proxy statement filed with the SEC.
Concern for civil cases
Possible risks for stockholders in addition to the likelihood that Dole’s strategic plan won’t pan out include lawsuits filed across the country, the committee wrote in the proxy statement.
Individuals, family trusts and pension/annuity plans — all stockholders — who filed the civil lawsuits contend Murdock and some board members breached their fiduciary duty.
The stockholders say the deal shortchanges them for their stock. They also contend some board members aided and abetted others in their alleged breaches of fiduciary duty.
Cases in California are on hold at the order of a judge, pending the outcome of the remaining cases, which have been consolidated in the Court of Chancery, Wilmington, Del.
On Aug. 29 the Delaware judge denied stockholders’ requests to expedite the case, ruling there was no threat of irreparable harm because they could still recover money after the Dole deal closes, if they prevail with their civil charges.
“Dole and its directors believe the allegations in all of the lawsuits are without merit and intend to vigorously defend the lawsuits,” according to the proxy statement.