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Holly Sugar Accept’s New York Firm’s Takeover Bid

October 14, 1987

COLORADO SPRINGS, Colo. (AP) _ Holly Sugar Corp. today said it has agreed to be acquired by New York-based Plum Associates for a sweetened $95 a share, or $106 million.

The deal has been approved by Holly’s board of directors, Holly officials said in a statement.

The annoucement came one day after the Colorado-based Holly Sugar, one of the nation’s leading sugar producers, postponed its annual shareholders meeting after receiving a second bid from Imperial Sugar Co. of Sugar Land, Texas.

Plum Associates, a New York-based partnership that has a 7.4 percent stake in Holly, last week offered $91 a share for two-thirds of the beet sugar manufacturer’s 1.12 million outstanding shares as a step toward acquiring the entire company.

But Plum increased that offer to $95 a share on Tuesday. A managing partner for L.F. Rothschild & Co., Plum’s investment adviser, acknowledged today that the Imperial bid played a role in sweetening the original bid by $4 a share.

″It was a competitive situation,″ said Franklin Chu, managing partner for Rothschild in New York. ″The (Holly) board finally accepted our bid because they felt it was the best package for the shareholders.″

He estimated the value of the total transaction at $106 million.

Imperial, whose offer was set to expire today, offered $68 a share in cash plus one share of common stock in the combined company for each of Holly’s 1.12 million outstanding shares.

Following the merger, the stock in the combined company would be sold to an employee stock ownership plan for $29 a share, giving the offer an indicated value of $108.6 million.

Sugar industry analysts said it was difficult to place a precise value on Imperial’s offer.

Today’s announcement was made jointly by Charles Azarow, president and chief executive officer of Holly, and Peter R. Harvey, a partner in Plum Associates.

″We believe the merger of Holly Sugar and Plum Associates is in the best interest of the company and all its shareholders, its employees and growers,″ Azarow said.

In its original proposal, Plum said its intention upon acquiring Holly ″is to leave operating management substantially intact and to provide the key managers with appropriate performance and equity incentive to maximize the long-term value of the business.″

That intention has not changed, Chu said.

Plum Associates was formed by Harvey, Solo Management Inc., and Schnittman & Schnittman to invest in Holly.

Chu said Plum agreed to extend its offer through Tuesday to allow Holly directors time to respond. The offer was set to expire Monday morning.

For the year ended March 31, Holly earned $4.9 million, or $4.38 a share, on sales of $317.1 million.

The company has been the target of a series of failed takeover attempts this year. One offer collapsed in August when the company’s former chairman, Michael S. Buchsbaum, postponed a $134 million bid following death threats against himself and his family.

The Holly offer is the second $100 million takeover bid in a year for Harvey, who is president of Artra Group Inc. Artra, a medical and consumer products firm based in Northfield, Ill., last November acquired the Sargent- Welch Scientific Company for $100 million.

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