Amer­ica's old­est CEO puts his Dole buy­out to a high-stakes test

The Pak Banker - - COMPANIES/BOSS -

Any day now, David Murdock, the 92-year-old owner of Dole Food Co, will find out whether his de­ci­sion to go to trial to de­fend the terms of his 2013 buy­out of the com­pany was heroic or foolish.

It was cer­tainly un­usual, and could lead to one of the big­gest judg­ments ever in Delaware's Court of Chancery, a lead­ing venue for cor­po­rate dis­putes. Dole faces two kinds of le­gal ac­tions that have been com­bined be­cause they both al­lege the buy­out price was too low. A small group of hedge funds have brought a so-called ap­praisal ac­tion, which is be­ing tried along­side a share­holder class ac­tion law­suit. While ap­praisal ac­tions some­times go all the way to trial, share­holder class ac­tions al­most never do, usu­ally end­ing with quick set­tle­ments.

In­creas­ingly, com­pa­nies see the law­suits sim­ply as part of the cost of cor­po­rate deal­mak­ing. But Murdock, a high school dropout and self-made bil­lion­aire, is hav­ing none of that. He fought the ac­tions all the way through a two-week trial that be­gan in Fe­bru­ary in Delaware, where Cal­i­for­nia-based Dole is in­cor­po­rated. Dur­ing the pro­ceed­ing, Murdock even took the stand to face two days of ag­gres­sive ques­tion­ing, de­spite his age and poor hear­ing.

The share­hold­ers have not backed down ei­ther. They are led by plain­tiffs' at­tor­ney Stu­art Grant, who has wrested mul­ti­mil­lion dol­lar set­tle­ments from News Corp and Gold­man Sachs, among oth­ers, in some of the few cases that have ac­tu­ally gen­er­ated big wins for share­hold­ers.

In the Dole case, in­vestors are seek­ing to nearly dou­ble the $13.50 a share Murdock paid for the com­pany, one of the world's largest pro­duc­ers of fresh fruit and veg­eta­bles. If they pre­vail, Dole and Murdock could have to put up as much as $1 bil­lion - - on top of the $1.2 bil­lion al­ready spent on the buy­out. That pos­si­bil­ity has prompted Moody's to warn that it could cut Dole's al­ready junk credit rat­ing, just as the com­pany needs cash to pay for new ships and in­vest­ments in plan­ta­tions.

A rul­ing from Vice Chan­cel­lor Travis Laster is ex­pected im­mi­nently. At the time of the Novem­ber 2103 buy­out, which share­hold­ers ap­proved by a slim mar­gin, Murdock was chair­man and CEO of the fruit im­porter and owned 40 per­cent of its stock. In court, Grant painted Murdock - Amer­ica's old­est CEO, ac­cord­ing to in­for­ma­tion ser­vice Fac­tSet - as schem­ing to drive down the stock price to the point where he could take the com­pany pri­vate on the cheap, then bul­ly­ing his board to ac­cept the deal. Murdock has de­nied the al­le­ga­tions. "We did a fair and hon­est trans­ac­tion that is be­ing made to look now like I was a dirty skunk that did all of this

dam­age," he tes­ti­fied. Murdock told the court he paid gen­er­ously for Dole, and that he pur­sued the deal not for per­sonal gain but to com­bine the food pro­ducer with a North Carolina re­search cen­ter he es­tab­lished to un­lock the se­crets of nutri­tion and longevity. Dur­ing the trial Murdock tes­ti­fied about his un­usual mem­ory, say­ing he could re­cite dozens of po­ems, and claimed he could still run as fast as ever. The ap­praisal ac­tion part of the case was brought by funds af­fil­i­ated with Me­rion Cap­i­tal, Hud­son Bay Cap­i­tal, Mag­ne­tar Cap­i­tal and Fortress In­vest­ment Group.

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