Murdock misled investors, court ruled

Murdock misled investors, court ruled

Dole Food Co. CEO David Murdock and Michael Carter, the company's former president, have been ordered to pay over US$148m to investors over the sale of the US group in 2013.

A judge in Delaware yesterday ruled Murdock and Carter must pay $148.1m over claims the two men pushed down the value of the company before Murdock took it private two years ago.

According to Bloomberg, Delaware Chancery Court Judge Travis Laster said Murdock received an "improper personal benefit” from the transaction.

In August, Dole announced Murdock, who already owned 40% of the business, would pay $13.50 a share for the rest of the company. The accepted offer gave Dole an enterprise value of around $1.6bn, including debt. At the time, Dole said the bid was a 32% premium on the price of the company's shares before Murdock made his initial offer.

However, Laster ruled the actions of Murdock and Carter "deprived shareholders of the ability to consider the merger on a fully informed basis", Bloomberg reported.

Shareholders accused the men and advisers at Deutsche Bank to drive down the value of Dole. Laster cleared the bank but ruled the men convinced directors Dole was not worth more than Murdock's bid.

According to Dow Jones Newswires, Laster said the executives under-estimated potential cost savings and cancelled plans for a stock buyback.

"These actions primed the market for the freeze-out by driving down Dole's stock price and undermining its validity as a measure of value," Laster wrote.