The Deal: Murdock Clinches $1.6B Dole Buyout

NEW YORK ( TheStreet) -- David H. Murdock looks to have the whole pineapple to himself again, with an offer for the 60% of Dole Food ( DOLE) shares he does not own.

Dole agreed Monday, Aug. 12, to be acquired by its chairman and chief executive in a deal valuing the company at $1.6 billion.

The enterprise value includes a $13.50 per share in cash offer, which is $1.50 above Murdock's initial $12 per share offer made on June 10, initially valuing Dole at about $1.5 billion. The agreed-to offer is also a 32% premium over the $10.20 per share the fruit giant's stock traded at prior to that $1.5 billion offer. It is valued at about 11.5 times estimated EBITDA.

When Murdock made his offer he owned about 40% of Dole's shares. Murdock pledged not to proceed with his offer unless it was approved by a committee of independent directors and backed by a majority of independent shares.

He engaged Deutsche Bank AG's ( DOLE) Eric Brook, Rick Grellier and Joseph DiMondi for advice on the transaction.

Dole's board, excluding Murdock, unanimously approved the agreement. The bid is subject to a 30-day go-shop period.

On June 25, Dole appointed a special committee led by board member Andrew Conrad and hired investment bank Lazard as its financial adviser and Sullivan & Cromwell as its legal advisor.

This is the billionaire's second stab at taking Dole private, having acquired it in 2002 for $2.5 billion and then taking it public again in 2009, raising about $446 million.

When Murdock made his offer on June 10, the fruit and vegetable purveyor had reported declining earnings, with a $67 million net loss for the quarter ended in March, compared to a profit of $16 million for the same period a year earlier. The company's EBITDA of $162 million last year is projected to fall to $139 million this year, according to Bloomberg data.

In July 2012 Dole launched a strategic review, hiring Deutsche Bank Securities and Wells Fargo Securities International for financial advice.

Murdock's history with Dole stretched back to 1985 when he became chairman and CEO after taking control of Castle & Cooke, and then secured that control when he merged it with Flexi-Van Corp. in 1985.

In 1995 Castle & Cooke was spun off as a real estate company, while Dole remained focused on fruits and vegetables. Murdock took Castle & Cooke private for about $600 million in 2000, according to The Deal Pipeline. At the time, he was chairman of both companies.

Murdock's dealings with Castle & Cooke left him in control of 98% of the Hawaiian island of Lanai, which he sold to software tycoon Larry Ellison for a reported $500 million to $600 million on June 21, 2012. The price tag was about what Murdock paid to take Castle & Cooke private in 2000.

As of March 23, according to the 10-Q filing, Dole had about $101 million in cash and cash equivalents, nearly $1.9 billion in assets held-for-sale -- which includes the proceeds likely gained from the $1.7 billion sale in September of its packaged foods and Asian fresh produce business to Itochu -- and about $1.6 billion in long-term debt. About $461 million in liabilities are connected to the assets held-for-sale, also according to the 10-Q.

Dole, which traces its roots back more than 150 years to pineapple plantations in Hawaii, is a $4.2 billion-sales producer of fruits and vegetables.

Company chief executive David DeLorenzo left Dole in February when the Itochu deal closed, a move that pushed chairman Murdock into the CEO role.

Written by Richard Collings.

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