Dole CEO prefers guiding firms alone
By Gary Gentile
Associated Press
LOS ANGELES — Self-made billionaire David Murdock has made and lost fortunes.
Advertiser library photo • Nov. 16, 2000
A high school dropout, he bought and sold a small restaurant in the 1940s, then used the proceeds to start what would become a real estate empire in Phoenix.
David Murdock wants control of Dole Foods Inc.
That began a lifetime of wheeling and dealing that has led to ownership of more than 10 companies and a 1,600-acre ranch stocked with Arabian horses.
Now the chairman and chief executive of Dole Foods Inc., the world's largest producer of fresh fruits and vegetables, is trying to make what could be one of his most lucrative deals ever.
Murdock has offered $29.50 a share — about $1.3 billion — for the 76 percent of Dole he does not control. The offer has been rejected by Dole's board as too low, but negotiations are continuing.
If successful, the deal would give Murdock sole control of Dole, freeing him from having to satisfy shareholders and curry favor with Wall Street analysts.
"I don't think he likes outside involvement," said Heather Jones, an analyst with BB&T Capital Markets. "He's the epitome of the self-made man. He has always done things the way he wants to do them ... and he doesn't want to change things now."
Murdock stands to make millions of dollars if the company grows and the stock market rebounds, allowing him to sell back shares to the public at a profit. Sole control also would allow him to transfer cash from Dole to his other business ventures.
Murdock did not respond to requests for an interview about the deal. He has set a Wednesday deadline for Dole to accept his offer, first made in September and extended twice.
Associated Press library photo • June 9, 1997
No competing offers have surfaced. Dole's two main competitors, Chiquita Brands and Fresh Del Monte Produce Inc., likely would face stiff regulatory opposition in the United States and Europe trying to combine with Dole.
Miling Vidad planted Guatemalan coffee seedlings at Waialua in June 1997 for Waialua Coffee, a subsidiary of Dole Food Co. Dole chairman David Murdock, who is trying to take the company private, has made billions by successfully using one company's success to leverage another. He is waiting for Dole's board to make a decision on his offer.
Meanwhile, Dole's languishing stock has been trading below Murdock's offer. Still, analysts believe Murdock will have to raise his bid to about $34 per share to satisfy stockholders.
"Given the recent increased scrutiny of boards and CEOs, we believe Murdock may have to increase his bid, as his offer clearly benefits one large shareholder to the detriment of remaining investors," Jones wrote in a September report.
Alexander Roepers, a vocal critic of the deal whose Atlantic Investment Management Inc. owns 6 percent of Dole shares, claims the stock has been hurt by the "Murdock discount" — the impression he has run Dole as a quasi-private company without due regard for investors.
Dole does not court financial analysts, preferring to keep a low profile on Wall Street. A more aggressive effort to tout the company could result in more demand for the stock, Roepers said.
A key question for investors is whether Dole shares will climb on their own, making it wiser to wait than accept Murdock's offer.
Dole has bounced back from a number of problems in recent years, including a banana glut, Hurricane Mitch and severe freezes that hurt California crops. The company has become a leader in the surging packaged salads business.
Such moves have helped bolster the bottom line. In the most recent quarter, Dole reported net income of $14.7 million, compared with a net loss of $94.8 million in the same quarter last year. For the first nine months, Dole reported net income of $137.8 million, compared with a net loss of $23.1 million for the same period of 2001.
Ultimately, Murdock's buyout may be more about control than profits. He has a history of maintaining control of his firms and using cash from one successful venture to finance others.
He is credited with rescuing Dole in 1985, when the company was deeply in debt and reeling from two hostile takeover attempts. He merged his container leasing company, Flexi-Van, with Castle & Cooke — as Dole was then known — and trimmed the company's operations.
In 1991, the corporation changed its name to Dole Foods.
Four years later, in a move to diversify, Dole ceased pineapple production on Lana'i to concentrate on developing the property for tourism. The company spun off Castle & Cooke as its development arm, with Murdock's ownership at 27 percent of the new firm.
Two years ago, he made a tender offer worth $700 million for the rest of the stock and took Castle & Cooke private, giving him control of a real estate gold mine.
Such management buyouts are not unusual, but often complicated because the people who know the most about the company's prospects are the ones making the offer.
"On one hand, management is obligated to watch out for the best interest of the shareholder, and on the other hand they want the best possible deal for themselves," said Jeffrey Jordan, a corporate and securities lawyer.
