DOLE should be bought out by a company with a low cost of capital
As a shareholder you have to wonder why DOLE can't use part of the sales proceeds to buy back its stock. It really comes down to the high cost of capital at DOLE. DOLE's interest expense has ranged in the high single digits over the past few years (some debt currently yields nearly 14%). I completely agree with the company's decision to pay down debt and cut the interest expense down to nothing. But you also have to wonder why a large multinational company like Cargill which can borrow money at 3-4% doesn't just buy DOLE (obviously with Murdock on board). Cargill could then keep the debt on DOLE and pocket the cash proceeds from itochu. DOLE's interest expense would drop by $100mn as a result of interest dropping from 8-9% to 3-4%and Cargill could receive the cash proceeds from itochu ($1.7b) which would more than cover a stock buyout at $13-14 say ($1.3b). I would like to think that if anyone was going to buy DOLE it would happen in the next 2 weeks and would have to have Murdock's blessing.