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Staley Negotiating Deal to Fend Off Tate & Lyle

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Associated Press

Staley Continental Inc., seeking to thwart a $1.42-billion takeover bid by British sugar refiner Tate & Lyle PLC, said Monday that it was negotiating with at least one other party interested in acquiring part or all of the company.

Staley, the nation’s second-largest refiner of corn syrup and a leading producer of food service supplies, said last week that it had discussed selling all or part of the company to third parties and expected to enter into such negotiations.

David Satterfield, a spokesman for Staley, would not identify the parties.

“The significance here is that we’ve commenced negotiations,” he said. “There is a significant difference between discussions and negotiations.”

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Bidding Companies Unknown

The company also said it would continue to explore other options to enhance shareholder value, including a financial restructuring or recapitalization, a joint venture or a leveraged buyout. In a leveraged buyout, the acquiring entity finances the purchase of the target company with sales of assets of the target or from its cash flow.

Industry analysts have mentioned Chicago-based Kraft Inc. as a company that may have an interest in acquiring Staley’s CFS Continental Inc. food service division. Staley defeated Kraft in a bidding war for CFS Continental in October, 1984.

But several analysts refused to speculate Monday on which companies might be involved.

“Everything that can be said has been said,” said Richard Elam, analyst at Blunt Ellis & Loewi Inc. “I’m just waiting for something to occur that’s concrete and palpable, and I don’t know what it’s going to be.”

Headquarters Would Move

Staley’s board of directors last week advised shareholders to reject Tate & Lyle’s second cash tender offer, which totals about $1.42 billion, or $35 a share.

Analysts have said Staley has a market value of about $40 a share.

In composite trading on the New York Stock Exchange, Staley shares closed up 50 cents to $38.75 on Monday.

London-based Tate & Lyle, Britain’s second-largest sugar refiner, owns about 5% of Staley’s stock and wants to acquire the entire company for its A. E. Staley Manufacturing Co. subsidiary, which produces corn sweeteners.

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Staley was based in Decatur, Ill., until about three years ago, when it moved its headquarters to Rolling Meadows in suburban Chicago.

Tate & Lyle has promised to move Staley’s headquarters back to Decatur, in central Illinois, if its takeover attempt succeeds.

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