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Murdock sweetens
bid for Castle
& Cooke

The executive is now
offering $18.50 a share

By Russ Lynch
Star-Bulletin

California investor David H. Murdock said today he is now willing to pay $18.50 cash a share to own all of Castle & Cooke Inc., 8.8 percent more than the $17 he offered on March 29.

The stock market apparently liked the price, which soon will be made official in a formal tender offer.

Castle & Cooke closed at $18.25 today on the New York Stock Exchange, up $1.19, a nearly 7 percent rise from Friday's close.

One analyst called the sweetened bid a good offer, but it's not nearly enough for shareholders who filed lawsuits seeking to halt the original bid by Murdock, who is Castle & Cooke's chairman.

Murdock, who already owns 4.5 million, or about 26 percent, of the company's shares, decided on the increased offer after a special committee of independent directors recommended it late Friday. At that level, his investment would be worth $600 million _ about $230 million for the 12.5 million shares he does not already own, plus picking up Castle & Cooke's debt of more than $300 million.

The share offer represents a 53 percent increase from the $12.06 trading price just before Murdock made his original offer. Analyst Stephen P. Percoco, of Lark Research in New Brunswick, N.J., today called it a good deal for Castle & Cooke stockholders.

"I think, in terms of the current price, that that's a great price for the shareholders. The assets that Castle & Cooke has are potentially worth a lot more than that, but it will take time for any of that to be realized," Percoco said.

Shareholders have filed lawsuits on the mainland and in Hawaii, seeking to stop the buyout on the grounds that Murdock's offer was too low.

Analyst Craig Silvers of Sutro & Co. in Los Angeles, a long-term follower of Castle & Cooke, said in a March 30 report that $17 a share was not enough and shareholders should expect a higher bid. His opinion was that the company was worth $29 a share, although he recognized that even $17 represented "a nice premium" over recent trading prices.

Silvers said today that he is not now able to comment on the company. A lawyer representing shareholders' who sued after the first offer said that Silvers is now consulting with some plaintiffs.

One of the plaintiffs' lawyers, Thomas A. Grande in Honolulu, said today that Murdock's sweetened offer still falls well short of what's fair to shareholders.

"We think it's still ridiculously low, particularly in light of the land values in Hawaii," Grande said. "We're talking about thousands of shareholders, some of whose life investments are at risk. Whether you own one share or 10,000 shares, a fair price should be negotiated," he said.

If Murdock succeeds in getting all of Castle & Cooke, his involvement in Hawaii will be even stronger than it has been since he used his Flexi-Van Leasing Inc. to take over the original Castle & Cooke in the mid-1980s.

For one, Murdock, 76, will end up personally owning 88,000 acres on Lanai, or 98 percent of the island where Castle & Cooke has two luxury resort hotels, a resort golf course and some luxury housing developments.

It would also give him personal ownership of about 11,000 acres on Oahu, where Castle & Cooke has residential real estate developments, such as Mililani Town and Mililani Mauka, and commercial properties, such as the 42-acre Dole Cannery complex in Iwilei.

Technically the formal offer will come from Castle Acquisition Inc., a new company owned by New Jersey-based Flexi-Van, which leases out freight containers and chassis. Murdock owns all of Flexi-Van.

A statement from Castle & Cooke said that after the independent committee's recommendation Friday, the full board of Castle & Cooke signed a definitive merger agreement with Castle Acquisition supporting the $18.50 offer.

Next will come a formal tender offer, which will be made "promptly" and will stay in place until June 30, Castle & Cooke said. The offer will be conditional on at least a majority of the non-Murdock stock being submitted for purchase.

Castle & Cooke was founded in Honolulu in 1851. By 1985 the company, which also included the huge international Dole-brand food business, was nearing bankruptcy after a series of setbacks including costly resistance to takeover attempts.

Murdock stepped in and saved the business, later dividing it into two separate publicly held companies, the global fruit and vegetables business Dole Food Co. and real estate under Castle & Cooke.

Murdock is chairman of both.