Dole shareholders expected to OK Murdock purchase
By Sean Hao
Advertiser Staff Writer
The agreement to sell Dole Food Co. for $2.5 billion last week to David Murdock will propel the self-made billionaire into position as one of Hawai'i's biggest private landowners with more than 123,000 acres in the Islands.
Murdock, the company's chairman and chief executive, would acquire thousands of acres of pineapple farms on O'ahu as part of the deal which includes 28,000 acres. When combined with his Castle & Cooke holdings, he would end up controlling 123,715 acres in Hawai'i.
If shareholders approve the Dole deal, as expected, it will mean 738,000 acres owned by five of the six largest landholders in Hawai'i will be under private management, according to the latest figures available from the state.
The consolidation of so much land in the Islands under private ownership raises concerns among some that owners will be less accountable for decisions on developing these lands because they face less public and government scrutiny. But other observers said the shift in land stewardship from a public to a private company is not necessarily cause for alarm.
"It all depends on the personality and the intent of the owner," said Mike Fitzgerald, president and chief executive officer of Enterprise Honolulu, a nonprofit economic development organization. "Both (private and public stewardship) can be successful. I think all kinds of investors are welcome here as long as they're sensitive to the land and the culture."
Murdock was unavailable to comment Thursday and Friday on his reasons for pursuing Dole or his plans for the company's Hawai'i holdings. But in previous statements the 79-year-old executive said he believes he can better manage Dole as a private company absent the pressure from shareholders to deliver earnings growth.
Murdock made the same argument when he purchased Castle & Cooke in 2000, noting that a public company would be unable to invest millions of dollars in needed road, sidewalk and apartment development meant to support the two resorts on Lana'i that were included in the deal.
Still, because these properties are now in private hands, just how much money Murdock has invested or how well those developments are faring during the current economic slowdown is unclear.
And that has some residents worrying about the island's future should Murdock fail in his plan to shift Lana'i's economy away from agriculture .
"There's rumors of hours getting cut back" for workers at Murdock's resorts, said Pat Reilly, a counselor at Lana'i High and Elementary School. "I think the biggest concern here is how are they doing and will they be able to sustain employment.
"I don't think any of us have a handle on it."
Murdock entered the local scene when he rescued Castle & Cooke Inc., one of Hawai'i's oldest companies, from bankruptcy in the mid-'80s. In 2000 he purchased the company for $675 million, giving him 98 percent of Lana'i, including two luxury resorts.
Castle & Cooke owns and develops real estate in Hawai'i, California, Arizona, North Carolina, Georgia and Florida. It also owns the Dole Cannery in Iwilei, and an 11,000-acre planned community in Central O'ahu including Mililani Town and Mililani Mauka.
Murdock would add about 280 employees in Hawai'i and 28,515 acres of land in Central O'ahu and the North Shore to his portfolio with the acquisition of Westlake Village, Calif.-based Dole. The company was founded by James Dole, who arrived in Hawai'i in 1899.
During Murdock's leadership in the '90s, Dole spun off its residential building division and named it Castle & Cooke. Murdock also shut down Lana'i's ailing pineapple industry and poured money into two luxury resorts, golf courses and million-dollar vacation homes.
It is unknown whether similar actions are planned for Dole's pineapple fields in O'ahu. One University of Hawai'i professor that specializes in land-use policy said that may happen eventually.
"It really depends on what we do with agriculture," said Nicholas Ordway, a finance professor at the university. "We're moving toward smaller, more niche-oriented farms that don't need as much space."
At the same time "as population grows so will the need for new housing. But that's 20 to 30 years down the road."
Shareholders are expected to vote on whether to sell their stake in Dole to Murdock early next year. If Murdock is successful, his Hawai'i holdings would rank third-largest among private landowners. Murdock would be behind top-ranked Kamehameha Schools, with about 366,000 acres, and Parker Ranch, with about 137,000, according to the state.
The Samuel M. Damon estate would rank a close fourth with 121,360 acres, according to the most recent state statistics. Alexander & Baldwin Inc. would remain the only publicly-traded large landlord, placing fifth on the list with 91,000 acres.
By and large, the state's private landowners have a relatively strong record of conscientious stewardship, Ordway said. And some, such as Hawai'i's largest private landowner, Kamehameha Schools, have benevolent missions.
Still, that estate has encountered much criticism about whether it is meetings its obligations to educate Native Hawaiians while conserving its land. The estate has also received public backlash for its lease-to-fee residential developments.
Ultimately, though, landowners typically are concerned about preserving the value of their land, said Tom Burnett, president of New York-based Merger Insight, which provides stock research to institutional investors. Sometimes that can best be accomplished through private ownership.
"A public company is so often managed to provide increased earnings every quarter," Burnett said. "That means they have to focus so much on short-term dividends," rather than long-term gains.
But placing a company in the hands of one person also has drawbacks, Burnett said.
"Sometimes you can have a narrow view of things, and you're not open to other opportunities that are out there," he said. "There's less diversity of ideas when you have one person at the top or one management group."
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
