Client Highlight: Special Committee for Dole Food Company Inc.
S&C Sets Exemplary Standard for Special Committees
The Delaware Chancery Court recently highlighted the “expert legal counsel” and “integrity” of S&C’s work in advising the special committee of Dole Food Company Inc. in the high-profile private takeover by CEO and 40 percent stockholder David Murdock. The Court’s ruling holds significant implications for how special committees conduct themselves in a merger—under S&C’s counsel, the Dole special committee’s actions created an exemplary model.
After taking Dole public in 2009, Murdock desired to go private again and made an offer to the company’s board in 2013. A special committee made up of disinterested and independent directors was formed to negotiate the deal. The special committee turned to Alison Ressler and her team of S&C lawyers to advise them through the transaction. The committee negotiated an increase in Murdock’s $12 offer to $13.50, which was approved by Dole’s stockholders.
Even before the deal was finalized, Dole stockholders filed suits claiming that the process was tainted and that Dole’s directors and officers were breaching their fiduciary duties in order to promote Murdock’s interests. Robert Sacks and a team of S&C litigators represented the special committee members in the case.
As the action proceeded to trial, S&C was able to persuade the plaintiffs to drop the four members of the special committee from the case. After a nine-day trial, the Court of Chancery issued a decision that praised the work of the special committee and its advisers, but concluded that the deal had been compromised by Murdock, with the aid of Dole President and General Counsel Michael Carter notwithstanding the “valiant efforts” of the committee and its advisers. The Court found that Carter had interfered with the special committee’s work and compromised the process by, among other things, knowingly presenting the committee with false projections, withholding information from the committee that he secretly provided to Murdock’s advisers in disregard of the committee’s instructions, and trying to control and mislead the committee.
In its post-trial opinion, the Court outlined the special committee’s “herculean effort” to overcome the conduct of Murdock and Carter. The Court cited the “diligence” of the committee and its advisers, which enabled them to overcome “most of Murdock and Carter’s machinations.” It found that the committee in fact acted independently, notwithstanding efforts by Carter and Murdock to keep them in line.
The ruling imposed one of the largest judgments handed out by the Court of Chancery on Murdock and Carter: $148 million. The special committee members—represented by S&C from start to finish—came out of it with their reputations untarnished and with praise for a job well done under trying circumstances.