6/13/2013 4:32:00 AM,
LOS ANGELES (CN) - Shareholders challenge Dole Food Chairman and CEO David Murdock's attempt to buy the company for $1.5 billion.
Lead plaintiff Salvatore Toronto filed the class action Wednesday in Superior Court, the day after reports that 90-year-old Murdock, Dole's controlling shareholder, wants to buy the Westlake Village-based company for $12 per share.
The class claims the billionaire Murdock is buying the company on the cheap, using his influence to muscle through an offer "plagued by substantial conflicts of interest."
Dole, the world's largest producer of fruit and vegetables, reported $4.2 billion in revenue in 2012, according to the complaint.
The shareholders claim Murdock has "opportunistically timed" his offer to coincide with a recent drop in demand for bananas, and a corresponding dip in Dole's share price.
"It's Like Deja Vu All Over Again," the shareholders say in the complaint, claiming that Murdock, who owns 40 percent of Dole shares, used similar tactics to take Dole private in 2002.
Back then, shareholders forced the billionaire to raise his buyout price from $29.50 to $33.50 by taking him to court, according to the complaint.
"Murdock, who is now 90 but claims to want to live to 125, is pursuing the same game plan he executed in 2002. As with the 2002 transaction, the present offer from Murdock, who is the majority and controlling shareholder in addition to being chairman and CEO, is plagued by substantial conflicts of interest, and Murdock is attempting to prevent the minority public shareholders from realizing fair value for their shares," the complaint states.
The class accuses Murdock of accelerating the deal before an alternative buyer can be found, and doubts that the Dole board will rein in the influential CEO.
"In 2002, he took the company private, saying that was the best course. But it did not take long for Murdock to bring the company public again, and he filed for an IPO in August 2009," the complaint states. "Now, less than four years after Dole's second IPO, Murdock has changed his story again and is telling shareholders that his lowball going-private $12 per share offer is in their best interests, at the same time his best interests are obviously served by acquiring such shares at the lowest possible price since he is the buyer."
Stock in Dole traded at up to $12.58 Wednesday, shareholders say, "reflecting the market's belief that Murdock's offer is inadequate and will have to be raised to convince shareholders to sell to Murdock."
The shareholders say Murdock "opportunistically timed" the buyout because while his offer is a "slight premium," it falls short of a 52-week high in Dole's share price.
"Murdock has just announced his offer, yet has threatened to terminate the offer if not accepted by the board within a month and a half. Murdock's message is clear: 'Give me what I want and give it to me now,'" the lawsuit says.
According to the complaint, Murdock has instructed Deutsche Bank to complete the deal by July 31.
Moody's ratings agency downgraded the outlook on Dole from stable to negative in reaction to Murdock's offer, the Wall Street Journal reported.
The class wants the buyout enjoined, and damages for breach of fiduciary duty and aiding and abetting breaches of fiduciary duty.
Named as defendants are Murdock and Dole directors Michael Carter, Elaine Chao, Andrew Conrad, David Delorenzo, Rolland Dickson, Sherry Lansing, and Dole Food.
The plaintiffs are represented by Francis Bottini, with Bottini & Bottini, of La Jolla.