Dole announces deal to go private
CEO David Murdock agrees to buy the agricultural company for $13.50 a share.
It was announced during Monday's premarket that Dole Food (DOLE) will be taken private acquired for $13.50 a share. This is a 5.4% premium to Friday's close of $12.81.
Company chairman and CEO David Murdock originally offered to buy the company for $12 per share on June 10, when the company was trading at just $10.20.
With an enterprise value of $1.6 billion, Murdock looks to buy the shares with a combination of cash and financing from Deutsche Bank, Bank of America, and The Bank of Nova Scotia.
The deal is contingent on a majority vote from shareholders. The initial offer of $12 was swiftly rejected by the company's owners, who sued the board of directors for not working to get the best deal for its shareholders.
The 90-year old Murdock seems to be buying the company for the sake of his family trust, commenting that the company will be better off "without the concern that a public company must have for the investing public's short-term expectations."
Analysts seem to expect the deal to go through. First, $13.50 is a huge premium to both the $12 (12.5%) initially offered and shares trading at $10.20 (32.4%) before the original bid.
In addition, Dole doesn't have any activist investors who are likely to step in and work against the deal. With Carl Icahn as a big investor in Dell (DELL), Michael Dell has been struggling to persuade shareholders to accept his offer for the company.
The next step is a 30 day go-shop period, where a special committee, with the help of an investment bank, will search for alternative strategies that could better serve shareholders. Historically, these strategies come in the form of additional buyout offers.
Citing the Dell example again, Michael Dell's original offer for the company was $13.65, but Carl Icahn came back with a $14 bid, including warrants for future shares. This forced Michael Dell to raise his offer.
Based on trading activity, investors do not expect a higher offer, with a small probability the $13.50 buyout will not be accepted. Shares pulled Dole pulled back at $13.45, but are up over 5% in afternoon trading.
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