Ruling in Dole Food Co. Case Upholds Shareholder Rights

On August 27, 2015, a Delaware judge ruled that David Murdock, Chief Executive of Dole Food Co., and Michael Carter, the Company's former Chief Operating Officer, shortchanged shareholders when Murdock purchased the company for just $1.2 billion. Delaware Chancery Court Judge and Vice Chancellor Travis Laster ruled that the insiders "deprived shareholders of the ability to consider the merger on a fully informed basis." Judge Laster awarded these damages to investors after finding that the execs drove down Dole stock by both lowballing potential cost savings and canceling a previously-announced stock buyback in 2013, just before Murdock made his offer to take Dole private.

The case (In Re Dole Foods Co. Inc. Stockholder Litigation, Consolidated CA 8703-VCL) is a reminder of the sticky situation shareholders can find themselves in when a company they’ve invested in suddenly starts shopping for a buyer.

There aren't a lot of avenues for shareholders to seek restitution, and it can sometimes feel like David v. Goliath when shareholders are up against a Billionaire like Murdock. Hopefully this verdict will serve as a reminder to other CEOs and insiders considering future mergers or going-private transactions that they are serving not just themselves, but shareholders as well. Shareholders deserve fair treatment and value for their investments, and this includes correct and complete information concerning the Company and its valuation, full disclosure of deal terms, and the ability to make an informed decision when it comes to shareholder votes. Hopefully this ruling serves as a reminder to Murdock and other big wigs that they report to the little guy, too.

Published on Aug 28, 2015
By Mario

Copyrighted 2016. Content published with author's permission.

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