British Sugar Refiner Offers $1.33 Billion to Acquire Rest of Staley

British sugar refiner Tate & Lyle PLC announced Friday a $1.33-billion bid for Staley Continental Inc., but the big Midwestern food company and one of the nation’s leading corn processors is expected to resist.

Staley commands a 25% share of the U.S. market for high fructose corn syrup, which is used extensively as a soft drink sweetener.

Tate & Lyle, which already owns nearly 5% of Staley’s stock, said it was offering $32 a share for all the remaining common stock.

Staley Continental, which is based in Rolling Meadows, Ill., will have no comment on any aspect of the offer until its lawyers examine the proposal, spokesman David Satterfield said.

But there was speculation that the bidding may go higher. Staley stock climbed $5.875 a share to $37.375 in active trading on the New York Stock Exchange.

The offer should have come as no surprise to Staley, which formulated an anti-takeover defense plan after Tate & Lyle was cleared in December under U.S. antitrust laws to buy up to 25% of Staley. It owns 4.9%, or about 1.5 million shares, of the U.S. company.

Lynton Wilson, North American managing director for Tate & Lyle, said at a Springfield, Ill., news conference that the $32 price was fair.

“We prepared to launch our bid at a time when the price for Staley shares was in the low 20s,” Wilson said. “I don’t know what may happen to the price on the market but we believe the $32 is a full and fair offer for the shares of the company.”

Not Corporate Raiders

Wilson said Tate & Lyle’s interest in the company “is a fundamental interest in the business,” not a passing financial interest.

“We’re not financial entrepreneurs or corporate raiders,” he said. “We’re manufacturing people involved in the processing businesses not only here in North America but in other countries as well.”

Tate & Lyle said Staley had previously proposed that Tate increase its stake acquired in November and become a more substantial minority shareholder.

But Tate & Lyle said it decided to launch the tender offer instead.

The acquisition would give Tate & Lyle its first interest in the U.S. corn sweetener market. Tate & Lyle said it would become the only supplier of all three types of sugar--corn, beet and cane--in the United States.

“We are confident that, as part of Tate & Lyle’s North American division, the performance and competitive position of Staley’s corn activities will be significantly enhanced,” said Tate & Lyle Chairman Neil Shaw. “The U.S. group is very complementary to our business,” Shaw said in London. “This will enable us to offer our customers sweeteners made from cane, sugar beet and maize (corn).”

The tender offer represents a 78% premium to Staley’s share price of $18 a share before the Tate & Lyle stake was announced.

Large Share of Market

Staley’s stock price was boosted in March by speculation that a foreign concern would launch a bid for the company.

Staley Continental is a holding company formed in early 1985 for A. E. Staley Manufacturing Co., a leading corn processor, and CFS Continental Inc., a food service supplier acquired in late 1984.

Tate & Lyle said Staley is the second-largest refiner of corn sweeteners in the United States behind Archer-Daniels-Midland Co., based in Decatur, Ill.