3 is the only real explanation. The rest are all typical investment banker / sell side brokers ex post facto fiction to make it sound like they know what's happening, which they don't. (I spent 20 years doing the same)
A fantastic summary, as usual. May I ask you how do you calculate the market capitalization ( $1.5b) based on the $16 price or the $2bn at the $21.50 estimation? Thanks
I'm curious what the inflationary risks are to a company like DOLE? Do they pass it on? Can rising labor hurt them? Appreciate any feedback. Thanks for the great work.
Thank you Connor for the work! I have one question. In the press release of July 30th (IPO price announcement) TP says:
"In addition, the underwriters have been granted a 30-day option to purchase up to an additional 3,750,000 ordinary shares at the initial public offering price, less underwriting discounts and commissions".
Does it mean that if the bankers want so they could "create" those 3,75M more shares diluting this way the curret shareholders equity or "piece of the pie"?
If so, would it be prudent to wait that month and see before considering adding some more shares? Or am I totally wrong?
Hi Alberto. This means that underwriting banks have an option to purchase 3.75m shares in the company, which would dilute current shareholders by roughly ~4%.
Connor, Thank you so much for these writeups, I learnt so much during this process.
I think that as the deal is complicated and the IPO was unsuccesful Mr Market may take its time to re-rate DOLE to its comps level...
Hope it happens soon!
What I find awesome about this idea is the incredible Margin of safety it has... I forecast Dole may earn between 1,7-2,1 FCF per share this year and IMO this kind of business should have a minimum multiple of 15x up to 20x, I even find 15x a too low multiple for a business that does not suffer during crisis, is not cyclical and is going to grow its ebitda (5-7% cagr)..
Those valuations give us a PT from 25,5 to 42 and its actual price is 15,5. The margin of safety is huge here.
Was pulling the ipo or reducing considerably the number of shares offered an option? Did they really need the money and does it concern you that management was willing to offer shares at this level if they thought it was due to market conditions.
I think pulling the IPO would have made a second attempt to re-engage with investors on very difficult.
I think it's more a case that they really wished to conclude a transaction that effectively began in 2018 when TP acquire 45% in Dole Foods. Given Murdock's age and likely need to exit, and the three year journey to get to this point I think they just wanted to conclude the merger and move on, rather than trying to maximise Day 1 value or an IPO pop. As the CEO Rory Byrne said today, "..the company’s objectives of the listing weren’t short term and, with a diverse business and the iconic Dole brand, it’s positioned well for growth and to attract investors." So no I'm not that concerned. Day 1 or near-term value is not that relevant. This could take 12 months+ to re-rate which I don't see as problematic.
3 is the only real explanation. The rest are all typical investment banker / sell side brokers ex post facto fiction to make it sound like they know what's happening, which they don't. (I spent 20 years doing the same)
A fantastic summary, as usual. May I ask you how do you calculate the market capitalization ( $1.5b) based on the $16 price or the $2bn at the $21.50 estimation? Thanks
Thanks Jose. Market cap calc is 93.1m shares x $16/share = $1.49bn.
Under original terms market cap target was $2bn, being 91.6m shares x $21.50 = $1.97bn.
Thanks for your clarification!
I'm curious what the inflationary risks are to a company like DOLE? Do they pass it on? Can rising labor hurt them? Appreciate any feedback. Thanks for the great work.
Thank you Connor for the work! I have one question. In the press release of July 30th (IPO price announcement) TP says:
"In addition, the underwriters have been granted a 30-day option to purchase up to an additional 3,750,000 ordinary shares at the initial public offering price, less underwriting discounts and commissions".
Does it mean that if the bankers want so they could "create" those 3,75M more shares diluting this way the curret shareholders equity or "piece of the pie"?
If so, would it be prudent to wait that month and see before considering adding some more shares? Or am I totally wrong?
I'd appreciate any comment, I,m learning a lot!
Thanks so much!
Hi Alberto. This means that underwriting banks have an option to purchase 3.75m shares in the company, which would dilute current shareholders by roughly ~4%.
Connor, Thank you so much for these writeups, I learnt so much during this process.
I think that as the deal is complicated and the IPO was unsuccesful Mr Market may take its time to re-rate DOLE to its comps level...
Hope it happens soon!
What I find awesome about this idea is the incredible Margin of safety it has... I forecast Dole may earn between 1,7-2,1 FCF per share this year and IMO this kind of business should have a minimum multiple of 15x up to 20x, I even find 15x a too low multiple for a business that does not suffer during crisis, is not cyclical and is going to grow its ebitda (5-7% cagr)..
Those valuations give us a PT from 25,5 to 42 and its actual price is 15,5. The margin of safety is huge here.
Thanks again!!
Was pulling the ipo or reducing considerably the number of shares offered an option? Did they really need the money and does it concern you that management was willing to offer shares at this level if they thought it was due to market conditions.
I think pulling the IPO would have made a second attempt to re-engage with investors on very difficult.
I think it's more a case that they really wished to conclude a transaction that effectively began in 2018 when TP acquire 45% in Dole Foods. Given Murdock's age and likely need to exit, and the three year journey to get to this point I think they just wanted to conclude the merger and move on, rather than trying to maximise Day 1 value or an IPO pop. As the CEO Rory Byrne said today, "..the company’s objectives of the listing weren’t short term and, with a diverse business and the iconic Dole brand, it’s positioned well for growth and to attract investors." So no I'm not that concerned. Day 1 or near-term value is not that relevant. This could take 12 months+ to re-rate which I don't see as problematic.