Staley Holds Talks With Its Spurned Suitor
Staley Continental Inc. huddled Wednesday with British sugar refiner Tate & Lyle PLC, which announced a one-day extension of its $1.38-billion buyout bid for Staley.
But Staley, a major U.S. producer of corn syrup and food-service supplies, said the talks with its English suitor did not mean it was ready to sell.
“We can confirm we are talking with Tate & Lyle, but I want to emphasize that we are continuing negotiations with other parties as well,” said Staley spokesman David Satterfield.
“And we’re still exploring other options, like a leveraged buyout or a recapitalization,” he said. In a leveraged buyout, investors borrow heavily to buy a company and then pay off the debt with the target company’s cash flow or the sale of its assets.
Meanwhile, London-based Tate & Lyle, England’s second-largest sugar refiner, announced that it had extended its $35-per-share cash tender offer for Staley until midnight EDT Wednesday.
Tate & Lyle spokesman James Kerr Muir said the British firm extended the offer because of its talks with Staley. The discussions “are at a delicate stage,” he said early Wednesday.
Tate & Lyle also said it increased its stake in Staley to about 8.2% from about 5% of the company’s 30 million outstanding common shares.
Staley has rejected Tate & Lyle’s $35-per-share offer, which the British company raised from $32 per share on April 28 after Staley rejected the initial bid.
Tate & Lyle also has offered to buy Staley depository shares for $53.15 each and preferred shares for $105 each.
Analysts have said Staley has a fair market value of about $40 per common share.
Tate & Lyle covets Staley’s Decatur, Ill.-based A. E. Staley Manufacturing Co. subsidiary, the country’s second-largest refiner of corn syrup.
Staley also owns CFS Continental Inc, a major producer of single-serving condiments and other food-service supplies, which Tate & Lyle would probably sell.