The universe of publicly-traded companies continues shrinking and the IPO pipeline remains sluggish despite U.S. stock market indexes moving relentlessly higher in recent years. Both are important issues that we'll explore in depth soon. In the meantime, that hardy perennial Dole Food Company filed for an IPO this spring, apparently aiming to go public this fall. Fresh out of Harvard's School of Horticulture & Agriculture, James Dole in 1899 moved to Hawaii and within two years founded the Hawaiian Pineapple Company (HAPCO) to grow pineapples on Oahu; the enterprise ultimately evolved into today's Dole Food Company, the largest producer of fruit and vegetables in the world.
Dole Food Co. actually traces its history back to 1851, when the trading company Castle & Cooke (C&C) was established in Hawaii by Samuel Castle and Amos Cooke, both originally from Boston. C&C eventually became one of the Big Five companies that dominated sugarcane growing and processing in the Territory of Hawaii during the early 20th century. In 1930, C&C acquired a 21% interest in HAPCO, which had successfully promoted its pineapples via American magazine advertisements in one of the first nationwide advertising campaigns; only in 1933 did the company start stamping "DOLE" on cans of pineapples and pineapple juice.
In 1961, C&C purchased the remaining shares of HAPCO and also acquired Columbia River Packers, which was renamed Bumble Bee Seafoods (which was sold off in 1985). In two tranches, 1964 and 1968, it acquired the Standard Fruit Company, a major grower and distributor of bananas and other tropical fruit. (Standard Fruit and other fruit companies from the U.S. famously wielded outsized influence in Latin America throughout much of the 20th century.) In 1976, C&C acquired Bud Antle Inc., a large California-based lettuce and celery grower.
After experiencing financial difficulties in the ensuing years, in 1985 C&C merged with Flexi-Van Corp., a NYSE-traded transportation leasing company controlled by David Murdock, who became CEO of the combined entity, which retained the C&C name. In 1991, shareholders approved changing the company's name to Dole Food and in 1995 spun off to shareholders C&C, its subsidiary that owned and developed real estate. Garnering headlines worldwide, C&C in 2012 sold 98% of the total acreage on Lanai, the sixth largest of the Hawaiian islands, to Larry Ellison, the founder and then-CEO of Oracle Corp. (ORCL), for $300 million; until 1992, the island had been home of one of the world's largest pineapple plantations, but which was no longer viable due to overseas producers driving down prices.
Since the turn of the century, the company has continued to expand the
depth and breadth of its product line through acquisition, absorbing JR Wood (frozen fruit
products) and Coastal Berry (strawberries and bushberries) in 2004, SunnyRidge Farm (mainly blueberries) in 2011, Mrs. May's Naturals (healthy snacks) in 2012 and Chile's TucFrut Farms (apples, blueberries and kiwifruit) in 2016. Among its divestitures, the company in 2012 sold its worldwide packaged foods and Asia fresh produce businesses to Japan's Itochu Corp. for $1.7 billion in cash, which was applied to paying down debt. Dole now operates plantations throughout Central and South America and in the Asia-Pacific region, including on the Hawaiian island of Oahu.
A venerable institution in his own right, the nonagenarian Mr. Murdock this spring disclosed his intention to take the company public for the third time. And since he expects to live to 125, this may not be the last round-trip for Dole Food Co. under his stewardship. To spread his vision of the benefits of a plant-based diet, Mr. Murdock continues to fund a major research institute dedicated to the "advancement of nutrition, agriculture and human health." He's not afraid to dole out advice on longevity, as one wag put it.
On June 5, 1964, Dole Food's predecessor Castle & Cooke, then the largest company in Hawaii, went public, trading on the New York Stock Exchange under the ticker symbol CKE. The New York Times noted that it was best known for food products such as Dole pineapple products, Bumble Bee seafoods and Royal Hawaiian macadamia nuts, but also had interests in land development, shipping, merchandising, insurance and a cemetery.
It wasn't until 2003 that Mr. Murdock, then the chairman and CEO of Dole Food, won shareholder approval (with a 77% "FOR" vote) to purchase the 76% of the company shares he did not already own for $33.50, plus the assumption of approximately $1 billion in debt, for a total enterprise value (including the debt assumed) of approximately $2.5 billion. Mr. Murdock explained at the time that taking the company private would allow him to expand Dole's operations around the globe and develop new products without having to answer to investors. Moreover, "[i]t takes capital and we will be spending capital to teach people how to eat," Mr. Murdock said at the time.
On October 23, 2009, Dole Food went public for the second time, raising $446 million. Below the estimated range of $13-15, the shares priced at $12.50 giving the company a market capitalization of approximately $1.1 billion; the shares closed at $12.28, down 1.7% that day. The depressed opening price and subsequent trading were attributed to concerns over the company's heavy debt load of $2 billion, which the proceeds of the offering were intended to pay down.
On August 12, 2013, Dole Food announced signing an agreement by which Mr. Murdock would purchase the 60% of the company's shares he did not already own for $13.50 in cash each, placing the total enterprise value (including the assumption of debt) at approximately $1.6 billion. The company's press release stated that the price represented an increase of $1.50 per share over Mr. Murdock's original proposal, and a premium of 32% over the $10.20 per share price immediately prior to such proposal. When proposing the takeover, Mr. Murdock wrote to the board: "Operating Dole Food Company as a private enterprise is the best alternative given the public-market focus on short-term earnings and predictable quarterly results. This will give the company greater flexibility to make investment and operating decisions based on long-term strategic goals."
Although 62% of disinterested shareholders voted "FOR" the deal in October, certain shareholders filed suit against the company, Mr. Murdock and C. Michael Carter, COO and general counsel, in the Court of Chancery of Delaware, where the company is incorporated, alleging that the buyout price was too low. Having lost at trial, the company and the executives settled the litigation with shareholders for $115 million at the end of 2015. Dole reincorporated from Hawaii to Delaware in 2001 and Mr. Murdock is not the first executive to express dissatisfaction with the latter state's inhospitality to business (a contention we'll delve into one day soon). In March of this year, the company and the executives settled for $74 million separate litigation in federal court with shareholders who accused them of providing "false, negative information designed to artificially depress the price of Dole's common stock."
On April 24, 2017, the company filed with the SEC a registration statement on Form S-1 for an initial public offering. Although the filing indicates that the company will raise $100 million (likely as a placeholder in the document), Bloomberg reports that the company is seeking to raise about $400 million. According to the S-1, the company will use the proceeds of the offering to pay down indebtedness, which stood at $2.5 billion at December 31, 2016. For the year, the company showed a net loss of $23 million on $4.5 billion in revenues. While Mr. Murdock remains chairman of the board, Johan Lindén, who had held various management positions in the company's European operations, was named president and CEO earlier in April.
For the prospective investor, there's plenty of - even recent - history
to unpack before trying to get in on the IPO. If IPOs are rather scarce
these days and some execs find
running a public company disadvantageous, Mr. Murdock seems to have no
qualms entering the public arena again. Perhaps Dole Food's public
offering could enliven the IPO market while bucking the trend of U.S. companies opting out of the publicly-traded realm.
Robert Stead
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