Dole Food Company, Inc. (DOLE): Monkey Business in the Banana Fields

Gimmick or Decent Intention?

In retrospect, almost a decade ago Mr. Murdock had played this same deal when Dole was a much bigger company. Dole went private at $33.50 a share with a net valuation of $2.5 billion.

The fact that Dole’s current stock price jumped above $12 (currently at $12.86) is a testament that investors are expecting a higher bid from either Mr. Murdock or someone else.

As far as StarMine is concerned, Dole has an intrinsic value of only $9.46, almost 21% lower than Mr. Murdock’s bid. It is also possible that because Dole’s stock price dropped almost 32.7% since September 2012 from the lifetime high of $15.16 before the proposal was presented, that this bid could be an attempt to recover Mr. Murdock’s own stock value by creating a gimmick. After all, he still owns 39.5% of the company. However, managing member of Westchester Capital Management and fourth largest stakeholder at Dole, Mr. Roy Behren, think the bid was “sufficient to start a negotiation.” So, of course, he thinks it should go a bit higher. Perhaps in the range of BB&T’s projections?

Conclusion

Regardless of the true motivation behind the proposal, it is certain that the offer has put Dole at the center of attention, and if banana prices rebound anytime soon, it will surely help Dole and its competitors to grow their bottom-lines substantially and, in turn, their stock prices.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned

The article Monkey Business in the Banana Fields originally appeared on Fool.com and is written by Mike Thiessen.

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