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Monday, July 10, 2000

Bill Gates owns
chunk of Castle
& Cooke Inc.

It isn't clear how this will
affect Murdock's efforts
to buy the company

Dole beats street

By Russ Lynch


Multibillionaire Bill Gates disclosed today that he owns 6.3 percent of Castle & Cooke Inc., one of the largest private landowners in Hawaii.

The Microsoft Corp. chairman did not disclose his intentions for his investment in the company, which is currently the target of a takeover bid by its chairman, David H. Murdock, and it was not clear today what influence the Gates ownership might have on the buyout.

Castle & Cooke But right after news reports about the Gates involvement, Castle & Cooke shares climbed about 5 percent before settling back to end the day unchanged at $19.19. The trading volume was 470,300 shares, more than seven times its average daily volume for the past six months.

Gates has visited Castle & Cooke's luxury resorts on Lanai, most publicly for his 1994 wedding, which became controversial when Murdock's security guards kept news reporters and photographers away from areas the media considered public property.

Castle & Cooke owns 98 percent of the island, including the resort hotels, and the property is considered a crown jewel among the assets Murdock is seeking.

The company has arranged for its regular board of directors meeting to be held on Lanai tomorrow.

Meanwhile, earlier today, Murdock said his bid of $19.25 a share has so far brought in offers to sell him 7.1 million shares. That is short of the 9.4 million he had set as a minimum for his buyout to go through, and he extended a deadline to keep his offer open until midnight Friday New York time, to give others a chance to offer their shares.

Murdock owns 27 percent of the company, and said he was seeking 75 percent of the shares he does not own. He received offers of about 58 percent.

Clearly, some shareholders were holding off in hopes of a better deal, and another disclosure today shows Murdock pointing out that if they are waiting in hopes that a later appraisal might result in them getting more, they might want to think again.

Analysts said shareholders may be holding on to their shares in hopes that Murdock's acquisition goes through anyway and that when he tries to get the shares held by the dissenters, he will come up against a Hawaii law that requires a full appraisal to be made to decide if the offering price was fair.

SEC documents show that Murdock told shareholders to be aware that in the Hawaii law "fair value" means the trading price before a takeover bid started. That could mean as little as $12.06 a share, Murdock warned.

Analyst Craig Silvers of Sutro & Co. in Los Angeles, who has studied the company closely and has argued that it is worth more than $30 a share, said today Murdock apparently miscalculated how many shareholders would wait and take the appraisal route.

It is still mostly up to Murdock to decide how he wants to proceed.

Papers on file at the SEC show he could accept the shares he has been offered so far and seek the rest later, or he could drop his bid.

The main way shareholders have of showing their dissatisfaction with Murdock's offer, which is 13.2 percent higher than his initial March 29 proposal of $17 a share, is by not responding. It was not known today which major shareholders agreed with the latest offer and which do not.

Castle & Cooke's second-biggest holder, the New York-based Tisch family, with 1.6 million shares, or 9.6 percent of the company, declined to comment on its intentions. Leader Daniel R. Tisch would not say today what his group has decided to do with its shares, acquired at prices from just under $17 to just over $18 a share after Murdock first said he would pay $17.

The Gates investment was disclosed in a Securities & Exchange Commission filing showing that as of June 28 he was holding 1,073,600 Castle & Cooke shares through his personally owned investment firm, Cascade Investment LLC. Officials of Cascade could not be reached for comment early today.

The disclosure did not show when Gates bought the Castle & Cooke shares, what he paid for them or why he bought them. The SEC requires a disclosure only when a shareholder's ownership passes 5 percent.

Analyst Silvers said he does not know what to make of Gates' investment.

"Maybe we'll see the island sold to Bill Gates six months from now," he said. "It could just be that Gates was married on the island, he is a friend of David Murdock, and did David Murdock a favor."

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