Dole Says Claims Over $1.6B Deal 'Recklessly Villainize' CEO

By Matt Chiappardi

Law360, Wilmington (July 2, 2015, 6:30 PM ET) -- Dole Food Co. Inc. told a Delaware Chancery judge Thursday that shareholders challenging the $1.6 billion deal to take the company private are trying to “recklessly villainize” CEO David H. Murdock with accusations he colluded with Deutsche Bank AG to sink the company’s share price before buying it out.

During spirited post-trial arguments in Wilmington, Dole attorney Bruce L. Silverstein of Young Conaway Stargatt & Taylor LLP said much of the suing shareholders' case borders on “character assassination,” and that Murdock is not a schemer who wrested away control of the company on the cheap, as he is being cast, but a philanthropist whose primary interest is spreading health and wellness.

Murdock, 92, is “looking to leave a legacy of health and nutrition,” Silverstein told Vice Chancellor J. Travis Laster. “He’s not looking to leave the earth with the biggest bank account.”

Silverstein argued that suing shareholders are “cherry picking” documents and then claiming without any context they show some sort of conspiracy between Murdock and financial adviser Deutsche Bank to set the pieces in motion for the buyout before revealing the plan to Dole’s board.

During a lengthy presentation to the court, plaintiffs’ attorney Stuart M. Grant of Grant & Eisenhofer PA rarely referred to any of the witnesses during the nine-day trial this past winter that spoke about the documents in question, and only cast “aspersions and innuendo,” Silverstein contended.

But Grant countered that Dole’s reasoning in the case is “baloney,” and that the record shows Murdock was deep in talks with the investment bank about his buyout months before it was proposed, and while it was doing work for the company.

“I am cherry picking,” Grant said in court. “I’m picking out the documents that prove this point.”

The shareholders claim that Murdock made a series of moves to prepare for the buyout of the 60 percent of Dole he didn’t already own, including the nearly $1.7 billion sale of its Asian business in 2012 to Japan's Itochu Corp. and the CEO’s $300 million sale of the Hawaiian island of Lanai to software mogul Larry Ellison.

The plaintiffs have also claimed Dole’s stock should have been worth more than the $13.50-per-share buyout price, but its value was depressed by pessimistic press releases, a suspended $200 million share repurchase program and an earlier go-private bid at an even lower price.

In court Thursday, Grant argued that Dole’s stock price should have been valued more than $10 higher, in the neighborhood of $25 per share.

Attorneys for both Dole and Deutsche Bank strongly refuted the shareholders’ claims Thursday, arguing there was no evidence of the theory the plaintiffs were positing, and that even if they could show Murdock was considering a buyout in the past, there’s a huge “chasm of difference” between that thought and a scheme to sink the company’s value.

“There is no smoking gun,” Silverstein said.

Deutsche Bank argued that the record doesn’t show the investment bank aided and abetted any alleged breaches by anyone, and the shareholders are “over-promising and under-delivering” with their claims.

The issues stems back to the deal that saw Murdock, who had already owned 40 percent of Dole, take the company private in 2013 in a transaction valued at $1.6 billion including debt.

Several minority shareholders sued in Delaware Chancery Court over the deal, alleging the offer undervalued the company and that a series of moves were engineered to sink the deal price to that level.

The litigation, which consists of a series of consolidated lawsuits, also includes an appraisal demand by a handful of hedge funds that bought stock days before the deal closed and are contending they didn’t get fair value for their shares.

Vice Chancellor Laster refused to throw out the case at the summary judgment stage and determined there were genuine issues of fact that needed to be sorted out at trial, which took place over nine days starting Feb. 23.

In the Chancery Court, trials do not typically include juries and are presentations of evidence, with post-trial arguments, akin to closing arguments, taking place sometimes months later.

Vice Chancellor Laster, who is known for often asking questions during attorney presentations, said little during the proceedings Thursday.

He took the matter under advisement and is expected to issue an opinion in writing at some point in the future.

The shareholders are represented by Stuart M. Grant, Geoffrey C. Jarvis and Nathan A. Cook of Grant & Eisenhofer PA, and Kevin G. Abrams, J. Peter Shindel, Jr., Daniel R. Ciarrocki and Matthew L. Miller of Abrams & Bayliss LLP, Randall J. Baron, A. Rick Atwood Jr., David T. Wissbroecker, Edward M. Gergosian and Maxwell Huffman of Robbins Geller Rudman & Dowd LLP, and Marc A. Topaz, Lee D. Rudy, Michael C. Wagner, J. Daniel Albert and Justin O. Reliford of Kessler Topaz Meltzer & Check LLP.

Dole and the individual defendants are represented by Bruce L. Silverstein of Young Conaway Stargatt & Taylor and Theodore J. Boutrous, Andrea E. Neuman, Colin B. Davis, Meryl L. Young and William B. Dawson of Gibson Dunn.

Deutsche Bank is represented by Stephen C. Norman and Matthew F. Davis of Potter Anderson & Corroon LLP, and David B. Hennes, Stephen M. Juris, Joshua D. Roth, Jesse Ryan Loffler and Andrew B. Cashmore of Fried Frank Harris Shriver & Jacobson LLP.

The cases are In re: Dole Food Co. Inc. Stockholder Litigation, case number 8703, and In re: Dole Food Co Inc. Appraisal Litigation, case number 9079, in the Delaware Court of Chancery.

--Additional reporting by Lance Duroni, Jamie Santo and Sindu Sundar. Editing by Emily Kokoll.

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