Dole Food Proposes Buyback of Minority Stake in Castle

Dole Food Co. on Wednesday proposed to buy back for $72 million in cash the minority stake in Castle & Cooke Homes that it spun off to the public just last year.

Los Angeles-based Castle & Cooke, a major real estate developer in Bakersfield and on the Hawaiian island of Oahu, said its outside directors will consider Dole’s $14-a-share bid to buy the 17% of common stock Dole doesn’t already own.

In March, 1993, Dole, headed by Los Angeles-based investor David H. Murdock, sold the minority stake in Castle & Cooke at $15 a share.

But the stock has floundered--falling 14% this year.

On Wednesday, Castle stock jumped $2.50 to $14.125 on the New York Stock Exchange as investors apparently expected higher offers to appear. Meanwhile, Dole Food shares rose 50 cents to close at $29.25.

“I can’t say (the initial spinoff of Castle & Cooke) was a very successful undertaking,” said Mark Matheson, a senior research analyst at Los Angeles-based Crowell, Weedon & Co.

Matheson said investors who expect a higher bid might be disappointed. Dole “owns most of the stock and no one is going to outbid them.”

Castle & Cooke stock, like that of developers across the nation, has been pummeled this year as rising interest rates have slowed down the pace of home buying. In addition, Castle & Cooke’s profit margins were disappointing this year and even in 1993, analysts said. Murdock, who owns 23% of Dole and chairs both Dole and Castle & Cooke, has publicly stated his intentions to separate Dole’s food operations from its real estate assets. While it’s unclear what Murdock will do with Castle & Cooke and his commercial real estate holdings, he’s still making money.

In July, 1993, he bought 85,700 shares of the home builder not held by Dole at prices ranging from $11.13 to $12.88 each, bringing his personal holdings to 94,500 shares, according to filings with the Securities and Exchange Commission.

Several food analysts said the purchase could provide a way for Dole to spin off its money-losing Hawaiian resort operation by packaging those holdings with the profitable Castle & Cooke.