Moody's Investors Service Wednesday changed the outlook on Dole Food Co. Inc. (DOLE) to negative from stable, while affirming its ratings, including its B1 Corporate Family Rating, on the fruits and vegetable producer.
The change comes after Dole received an unsolicited proposal from David Murdock, its chairman, chief executive and the largest stockholder, to acquire the company for $1.5 billion. The negative outlook reflects the uncertainty and event risk associated with the bid.
Murdock and his affiliates currently own around 40 percent of Dole's common stock. The offer price is $12 per share for all outstanding shares not currently owned by Murdock or his family. If successful, this will be the second time Murdock has taken Dole private, after doing so in 2003.
According to Moody's, a downgrade may be considered if the company is taken private in a leveraged transaction, or if debt/EBITDA is sustained above 5.5 times for any other reason. Ratings could also be downgraded if operating profits worsen or if the company engages in large debt funded acquisitions or shareholder returns.
The offer for the Westlake Village, California-based company was announced on Tuesday. It represented an 18 percent premium over the closing price of $10.20 per share on June 10.
Dole's board of directors will be meeting over the next few days to establish a Special Committee of independent directors.
The stock advanced over 1 percent on Wednesday to settle at $12.59.
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