Dole Food has agreed to a higher takeover offer from Chairman and Chief Executive Officer David Murdock in a deal that values the fresh fruit and vegetable producer and marketer at $1.21 billion.

Murdock raised his offer to $13.50 a share in cash, the Westlake Village, California based company said in a statement Monday. That’s a 13 percent boost from the $12 a share Murdock, 90, offered in June for the 60 percent of the company not already owned by him or his family.

Murdock, who served as CEO between 1985 and 2007, returned to the role in February. He took the company private once before, in 2003, and has said he wants to do so again to remove “the concern that a public company must have for the investing public’s short-term expectations.”

Dole has been unprofitable in two of the last three years and according to one analyst’s estimate it’s forecast to lose $11.3 million in 2013. Sales declined in 2012 after the company divested European businesses and as banana prices fell in North America.

The transaction will be paid for with cash and equity contributed by Murdock as well as financing from Deutsche Bank AG, Bank of America Corp. and the Bank of Nova Scotia. The deal, expected to close during the fourth quarter, includes a 30-day “go-shop” period during which the board may consider alternate proposals.

Murdock is the founder of the North Carolina Research Campus in Kannapolis. He also maintains a residence there,

Breakup Fee

Dole will pay a $15 million breakup fee if it accepts an alternative takeover. Murdock will pay $50 million if he fails to complete the transaction under certain circumstances.

Shareholders sued the company in June, alleging the board was violating its legal duty to get the best price by accepting Murdock’s bid.

Dole rose 5.3 percent to $13.49 at the close in New York the biggest rise in two months and its highest price since Oct. 4. The shares have gained 32 percent since Murdock’s initial offer was announced this year.

The company was founded 162 years ago and operates in more than 90 countries, producing bananas, pineapples and lettuce in Latin America and southeast Asia, according to its website.

Dole shareholders will receive $13.50 per share, a 5 percent premium to its $12.81 Friday closing price. This is a sweetened bid for the fresh fruits and vegetable business, up from the $12 per share Chairman and CEO David Murdock offered in June.

Dole currently has about 89.9 million outstanding shares, according to FactSet.

The company put the transaction’s total value at about $1.6 billion, which includes debt.

Changes at Company

Dole has gone through a number of major changes recently.

It sold its packaged foods and Asia fresh business for $1.69 billion in a deal that closed in April. That allowed Dole to become solely an international commodity produce company, with a narrower focus that also makes its earnings more volatile.

In May, Dole said it would indefinitely suspend its $200 million share repurchase program and use its cash instead to update its shipping fleet to enhance growth prospects. The company said that another factor in the suspension of the repurchase plan was the drag on earnings, due to recent losses in its strawberry business.

The acquisition will be financed with cash and equity from Murdock and financing committed by Deutsche Bank, Bank of America and The Bank of Nova Scotia.

Dole’s board unanimously approved the offer, which still needs the approval of at least a majority of outstanding shares held by stockholders other than Murdock and his affiliates. Murdock abstained from the board vote.

Dole, which is based in Westlake Village, Calif., will have a 30-day go-shop period in which it can actively seek out alternative bids from other parties.

The deal is expected to close in the fourth quarter.