26 April, 2017 /Woori BMO Group/ According to analysts at the wealth management company Woori BMO Group, Dole Food, one of the world’s top banana and pineapple producers, has revealed plans to re-open the public after being taken over by the 94-year-old billionaire David Murdock just over three years ago.
The latest twist in a long-running saga involving Mr. Murdock, who bought the 166-year-old company for $1.2bn in November 2013, would mark an initial public offering. He was the company’s chief executive at the time.
As a result of class-action lawsuits, the 2013 buyout faced censure from Delaware Court of Chancery. The court found that Mr. Murdock and Michael Carter, another business director, took action that resulted in “lifting down Dole’s stock price” to make the deal cheaper.
According to a filing with US securities authorities, Mr Murdock controls all of the California-based business. He has a long history with the group, acquiring Castle & Cooke in 1985, and spinning around a decade later on Dole Food.
“This may be Dole Foods’ push to gain freedom after many years under Mr Murdock’s tutelage,” said Andrew Williams, Woori BMO Group’s Director of Institutional Equity.
Instead, in 2003, he purchased the company again and floated its shares in 2009.
“Dole, which distributes fruit and vegetables in North America, Europe, and South Africa, generated net revenues of $4.51 billion in 2016, down slightly from the previous year. It has reported a net loss of $23.7 million, double the loss of the prior year,” said Christian Harper, Director of EMEA Wealth Management at Woori BMO Group.
At the end of last year, California-based Dole had nearly $1.2bn in net debt, something it flagged up as a potential risk to investors.
Dole also cautioned that the immigration and trade policies that US President Donald Trump advocated on could also have “a material adverse effect” on the business”.
Border controls or revisions to the North American Free Trade Agreement, in particular, could raise the cost of buying products from abroad and bring both revenue and profit margins under pressure.
Moreover, tighter immigration and work visa controls could reduce Dole’s “labour mobility.”
Dole said in the filing that since Mr Murdock took it private, it has made progress in strengthening the business, saying that “we have taken significant measures to save costs and to divest non-core assets.”
The group added that “we have also made significant improvements throughout our global supply chain, in particular by acquiring farms and delivering three new West Coast vessels.”
Dole plans to raise its IPO to up to $100 m. The figure is likely a placeholder that will change as the deal is being marketed by underwriters. The listed underwriters are Morgan Stanley, Merrill Lynch, and Deutsche Bank.