Exercising Appraisal Rights – An Effective Tool For Canadian Activists?

In the wake of Dole Food Co.'s $2.4 billion management buyout, the question of whether the exercise of shareholder appraisal rights is an effective tool in the Canadian shareholder activism scene emerges.

In late 2013, management of Dole Foods offered to purchase the remaining 60% of shares not already owned by CEO and founder, David Murdock at what the market and analysts deemed an "underwhelming" offer. The buyout was accepted by a majority of the minority shareholders (barely!) however, certain shareholders (hedge funds following the lead of Carl Icahn), reserved and exercised their appraisal rights during the process. Ultimately, about 25% of Dole's shareholders successfully exercised their appraisal rights. For a more comprehensive analysis on the use of appraisal rights in Dole Foods, please see this recent New York Times article.