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Flexi-Van Leasing Offers to Buy Castle & Cooke

Castle & Cooke is looking more attractive due to the economic recovery in Hawaii.

Castle & Cooke

(CCS) - Get Free Report

closed up 4 13/16, or 40%, to 16 7/8 in Thursday trading after its biggest stockholder, New Jersey-based

Flexi-Van Leasing

, offered to buy the real estate company for $17 a share.

The proposal represented a 41% premium over Wednesday's closing price of 12 1/16 and it valued the stake it did not already own at about $213 million.

Flexi-Van Leasing, a private company that specializes in the rental of transportation equipment, owns 26% of Castle & Cooke equity. It is controlled by David Murdock, who is the chief executive of both companies.

Castle & Cooke, a Los Angeles-based company that builds homes and owns resorts in Hawaii, was spun off from

Dole Food

(DOL) - Get Free Report

to shareholders in 1995. Murdock is also the chief executive of Dole.

Craig Silver, an analyst at


, downgraded his buy rating on Castle & Cooke to hold when its shares rose above $16.

"This stock is strictly an arbitrage play," Silver said. "The average investor realizes that there is not a lot of upside potential at this price."

Silver said he expected the board of Castle & Cooke to seek a slightly higher bid price before the deal closes.

Deutsche Bank

is advising on the transaction.

Silver believes Castle & Cooke stock is undervalued and sees the net worth of the company at $29 a share, based on the recovery in Hawaii's economy and housing prices.

"Murdock's timing is excellent," Silver added.