Dole Holders Accept CEO's
$1.2 Billion Buyout Deal
2013 7:31 p.m. ET
Co.'s $1.2 billion sale to its chief executive and founder squeaked
past a shareholder vote on Thursday while several large holders plan
to seek a second opinion on the deal price from a judge, according to
people familiar with the matter.
buyout passed with the support of 50.9% of the shares not held by CEO
David Murdock, who owns 39.5% of Dole and is taking it private for the
second time in a decade. Deal approval required a majority of non-Mr.
Murdock shares to pass.
funds holding at least 10 million shares—or more than 12% of Dole's
stock—have said they would seek appraisal for their shares, a legal
proceeding in which a judge sets what he or she finds to be a fair
price, the people said. Judges in appraisal cases have often awarded
more than the offer price, especially in buyouts by large shareholders
like Mr. Murdock. An appraisal could result in petitioners receiving a
lower as well as a higher price, and a decision often can take years.
of those shares are held by Merion Investment Management LP, which on
Tuesday disclosed an 8.3% stake in Dole. Prior to then it hadn't
disclosed a position, meaning it owned 5% or less.
hedge funds have also reserved their right to seek appraisal and have
forgone the $13.50 a share buyout offer, according to people familiar
with the matter. A representative for Dole declined to comment, but
confirmed that the company had received appraisal notices from several
shareholders. Albert Fried & Co. analyst Sachin Shah said on Thursday
that the company could be worth more than $17 a share, including its
valuable land in Hawaii.
isn't the first appraisal case for Merion, whose strategy includes
buying shares of companies on the brink of a buyout and pushing for
more in court.
teamed with three other funds in 2011 to seek appraisal for 5.84
million shares of Cogent Inc., which had just been sold to 3M Co. This
summer, a judge awarded the funds 3.5% more than the sale price. In
2012, the Radnor, Pa.-based fund sued for appraisal of its stake in
Deltek Inc., which had been bought by private-equity firm Thoma Bravo
LLC. That suit was later dismissed.
currently seeking appraisal for its 5.4% stake in BMC Software Inc.,
which it acquired weeks before the company's shareholders voted to
approve a $6.9 billion buyout by private-equity firms Bain Capital LLC
and Golden Gate Capital this summer.
BMC and Dole, Merion now has more than $450 million tied up in
appraisals, based on the merger prices of the two deals.
run by Andrew Barroway, a former lawyer at Kessler Topaz Meltzer &
Check LLP, which represents plaintiffs in big merger and securities
cases. Mr. Barroway didn't respond to a request for comment.
stock price closed up a penny at $13.55, above the buyout price, in 4
p.m. trading Thursday in New York.
be too late for investors who acquired shares after Wednesday to
benefit from an appraisal, which requires shareholders to notify the
company before the vote. But a person familiar with the trading
strategy said the newcomers are likely betting on a the outcome of a
separate lawsuit over the deal that is moving ahead in Delaware court.
case, shareholders accused Mr. Murdock, who also chairs Dole's board,
of manipulating the stock price in the run up to his bid for the
shares he didn't own. The company canceled a planned stock buyback in
May, sending shares plunging to their lowest level in nearly a year.
Dole also announced it would spend $165 million on new ships, a big
upfront cost the plaintiffs say was designed to further depress the
shares. Mr. Murdock announced his bid two weeks later.
As it was
telling stockholders the shares were worth $13.50, Dole separately was
telling its banks that the company had net assets worth more than $23
a share, according to the shareholders' complaint, which cites
nonpublic materials shown to lenders.
company denies the allegations and the case faces a trial later this
year or early next. That Dole shares closed above the deal price on
Thursday suggested investors are optimistic Dole will be the next in
merger lawsuits result in more money for shareholders. Most settle,
with companies agreeing to disclose more information about the deal
process and to pay the plaintiffs' attorney fees.
law firm for the Dole plaintiffs, Grant & Eisenhofer PA, has a string
of big damages cases to its name. The firm secured multimillion-dollar
payouts in litigation over the sale of Del Monte Foods Co. to
KKR & Co. LP in 2011, of El
Paso Corp.'s pipeline business to
Kinder Morgan Inc. in 2012, and of Delphi Financial Group Inc. to
Tokio Marine Holdings Inc.
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