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Thursday, Mar 28, 2024

Dole Ripe for Public Offer?

Why is a 94-year-old billionaire eager to take his company public? That’s the question investors are asking about David Murdock and Westlake Village-based Dole Food Co. Inc., which filed preliminary paperwork with the Securities and Exchange Commission on April 25 for an initial public offering. And several experts believe the offering could indicate a hunger by Dole for acquisitions. Murdock is the sole owner of Dole. The company grows and distributes fresh fruit and vegetables from 124,000 acres of farms and other land holdings around the world. For 2016, the company reported a net loss of $23.7 million on revenue of $4.5 billion. Attempts to reach a representative of Dole were not successful. Rick Andrade, managing director at Janas Consulting, an investment bank in Pasadena, speicalizes in acquistions and finance for food and beverage companies. He said that Murdock’s thinking may be that he is familiar with the public market and has the right team in place so it makes sense to go public, “especially if you want to make acquisitions and want to use the public money to do that,” Andrade explained. This would be the third time that Dole went public. Murdock gained control of the company in 1985 and took it private in 2003. He repeated the cycle, taking it public in 2009 and private again in 2013. Murdock is worth an estimated $3.2 billion, according to sister publication Los Angeles Business Journal. In the 2013 privatization, Murdock bought all the shares for $13.50 apiece, valuing the company at roughly $1.6 billion, including debt. Later lawsuits by shareholders alleged Murdock and others undervalued the company in the deal. The company paid more than $150 million and Murdock himself paid an unspecified amount in settlements. Private-public management For its latest offering, the SEC filing was light on financial details. It did not state the number of shares offered, the price or the company’s ticker symbol. Randolph Beatty, a professor of accounting at USC Marshall School of Business who specializes in initial public offerings, said it seems that Murdock has some strongly held beliefs and that may lead him from time to time to take the company private. That is good for the investors who are going to receive a bump in share price as he takes it private, Beatty said. “When he is running it privately, he and his management team can do what is necessary to increase value for when they go public again,” he added. Since going private in 2013, the company has made investments in its supply chain, specifically with three new ships on the West Coast that have contributed to minimizing shipping costs, and adding farms in Latin America, including organic pineapple farms in Costa Rica and a diversified fresh fruit farm in Chile, according to its SEC filing. Dole as well has taken steps to reduce costs and divest itself of non-core assets, such as idle land in Hawaii and a Swedish fresh fruit procurement and distribution operation, the filing said. Morgan Stanley & Co., Bank of America Corp. and Deutsche Bank AG are the joint lead book-runners for the proposed offering. Dole was among 31 companies filing for an initial public offering in April, a 47 percent increase from the 21 filings in April 2016, according to the database at the Nasdaq website. Dole is the first company this year from the San Fernando Valley to file for an IPO. The most recent to go public was BlackLine Inc., a Woodland Hills accounting software developer that took that step in October. BlackLine’s share price debuted at $17 and closed on May 10 at $32. In total, 2016 was a weak year for IPOs, with only 106 added to the U.S. exchanges, a 35 percent drop from the previous year, according to FactSet Research Systems Inc., a financial data company in Norwalk, Conn. Andrade, of Janas Consulting, said a public company allows investors to easily value their investment, understand the growth trajectory through required quarterly reports and get a higher valuation because of financial transparency. “You know the market cap of the company, you look at the quarterly filings and they disclose everything they need to by law,” he said. As for how the proceeds from the sale of shares are spent, one option is a dividend for investors but that can be very expensive, said USC’s Beatty. “It is far more likely there are strategic plans that he (Murdock) and his management team have in mind, and acquisition would be an obvious next step,” Beatty added. In the SEC filing, the company is vague on its plans for the proceeds to be raised. It stated that the money would be used to pay debts, for general corporate purposes and investing in short-term securities.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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