Dole Foods owner ordered to pay former shareholders $148 million

by Keith Nunes
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David H. Murdock (left) and C. Michael Carter (right)

GEORGETOWN, DEL. — David H. Murdock, chairman and chief executive officer of Dole Foods, and C. Michael Carter, former chief operating officer, have been ordered by the Court of Chancery of the State of Delaware to pay former shareholders of Dole Foods approximately $148 million for actions he and Mr. Carter took in 2012 to drive down the company’s stock price as Mr. Murdock engaged in a buyout to take Dole Foods private.

In 2012, Mr. Murdock approached the Dole Foods board of directors and offered $12 per share for the company. The two sides eventually settled and Mr. Murdock purchased all outstanding shares of the company for $13.50 per share. The court’s order enhances the per share value of the company’s stock by $2.74 for a total per share price of $16.24

Specifically, the court said before Mr. Murdock made his 2012 proposal to Dole’s board, Mr. Carter “made false disclosures about the savings Dole could realize after selling approximately half of its business in 2012.” Mr. Carter also cancelled a recently adopted stock repurchase program that affected public interest in Dole’s stock. The actions primed the market for what the court called a “freeze-out” and drove down Dole’s stock price.

J. Travis Laster, vice-chancellor of the court

“Under these circumstances, assuming for the sake of argument that the $13.50 price still fell within a range of fairness, the stockholders are not limited to a fair price,” wrote J. Travis Laster, vice-chancellor of the court, in his opinion. “They are entitled to a fairer price designed to eliminate the ability of the defendants to profit from their breaches of the duty of loyalty. This decision holds Murdock and Carter jointly and severally liable for damages of $148,190,590.18, representing an incremental value of $2.74 per share. Although facially large, the award is conservative relative to what the evidence could support.”

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