Tuesday, June 11, 2013
So it looks like David Murdock, Dole's CEO and 40% shareholder, is putting in an offer to take Dole Foods private at $12/share. According to the WSJ, this offer is subject to two conditions: 1) that a najority of the disinterested directors approve it; and 2) that it be approved by a majority of the minority shareholders.
Why would Murdock make it clear in his initial offer to the board that he has those two conditions? Isn't that for the board to decide? Well, it looks like Murdock's lawyers have been up late reading. Remember In re MFW S'holders Litigation from 10 days ago. Chancellor Strine is trying to bring some order to the question of standards of review of transactions involving controlling shareholders. In MFW he provided Murdock and his lawyers the following bit of help:
When a controlling stockholder merger has, from the time of the controller’s first overture, been subject to:
(i) negotiation and approval by a special committee of independent directors fully empowered to say no, and
(ii) approval by an uncoerced, fully informed vote of a majority of the minority investors,
the business judgment rule standard of review applies.
And that's what Murdock is setting up for here. By relying on robust procedural protections Murdock is hoping to get the deferential business judgement standard to apply to his deal to take Dole private. So will will this get litigated? Well, yes. So, a very quick first test for Chancellor Strine's unified approach.