Dole Food Co. (DOLE) shareholders sued directors of the fresh-fruit producer alleging they are potentially shortchanging investors by considering a $645 million buyout offer by the company’s top executive.
Dole’s board will be violating its legal duties to get the best possible price for the company unless it rejects the $12-a-share bid by Chief Executive Officer David Murdock for the 60 percent of Dole that he or his family don’t already own, a family trust that holds Dole shares claimed in a lawsuit.
“If the board approves the proposed transaction, it will have rubber stamped the transaction without determining whether it maximizes values to minority shareholders,” the investors said in the Delaware Chancery Court suit, asking a judge to bar the deal from proceeding.
Murdock, who took over as Dole’s CEO in February, has said he will take the world’s largest producer of fresh fruit and vegetables private if his bid is accepted. The 90-year-old executive is reprising his 2003 role in transforming the food company into a closely held firm. Dole went public again in 2009.
Scott Griswold, a spokesman for Westlake Village, California-based Dole, didn’t immediately return a call yesterday seeking comment on the lawsuit.
Operating Dole as a closely held enterprise will give it more ability to focus on long-term goals “without the concern that a public company must have for the investing public’s short-term expectations,” Murdock wrote in a letter to the board this month.
Dole has reported a drop in earnings before interest, taxes, depreciation and amortization for the past three years and the company in May said there may be a fourth annual decline on lower prices for bananas and berries.
Attorneys for the Setrakian Famiy Trust say Dole directors are considering Murdock’s bid without soliciting other offers for the food company.
Board members are “failing to act in good faith and to exercise the necessary care required” in considering buyout offers by not soliciting other bids, the family said in the suit.
Murdock, the company’s largest shareholder and its CEO for 22 years through 2007, resumed full control when David A. DeLorenzo left to manage Dole’s packaged-foods and Asian businesses, which were sold to Japan’s Itochu Corp. (8001) for $1.69 billion in April.
The case is Setrakian Family Trust v. Dole Food Co., Delaware Chancery Court (Wilmington).