Amfac Stock Up on Investor, Buyout News

SAN FRANCISCO — Top managers of Amfac Inc. proposed a $705-million buyout on Thursday, shortly before fellow diversified food-processor Castle & Cooke Corp. announced that it had taken a big share stake in Amfac.

The announcements touched off a sharp run-up in Amfac’s shares and prompted analysts and stock traders to say a bidding war for Amfac may be looming.

The San Francisco-based company’s managers said they were abandoning ongoing sales of some Amfac businesses and were instead offering $41 a share for Amfac’s 17,173,091 shares, or nearly $705 million.

Shares of Amfac shot up $6.75, or more than 17%, to close at $44.125. It was the biggest percentage gainer on the New York Stock Exchange and among the most heavily traded, with just over 2 million shares changing hands.

Not a Response

Shares of Castle & Cooke also rose, gaining 50 cents to $24.75 on the NYSE.

“It looks like it might be a competition,” said a speculator in takeover stocks. “I’ve been told stock values might be as much as $50 a share.”

Another speculator said Castle & Cooke had bought stock as recently as Wednesday. “Some think this leveraged buyout is a defensive move against Castle & Cooke,” the arbitrager said.

The buyout offer was not a response to Castle & Cooke’s accumulation of stock, an Amfac spokesman said.

Amfac, whose businesses include food processing, sugar cane growing, retailing, hotels and resorts, has been selling off subsidiaries as part of a restructuring begun after the dismissal last November of President Ronald Sloan.

The company has been frequently mentioned as a takeover candidate, a status reinforced Thursday by a government filing in Washington by Castle & Cooke. Castle & Cooke said it had acquired 7.3% of Amfac common stock and had received clearance from federal antitrust regulators last January to buy as much as 15% of Amfac’s common stock.

The Los Angeles-based food processor, best known for its Dole line of products, said it raised the possibility of a business combination between Amfac and a Castle & Cook unit in January, but Amfac elected not to pursue the talks. Both companies have substantial businesses and real estate in Hawaii.

Amfac spokeswoman Deborah Demer said Castle & Cooke offered in January to merge some of its Hawaiian property with Amfac’s in exchange for Amfac stock. “We felt it was inappropriate . . . because it would result in a dilution of shareholders’ interests,” Demer said.

Analysts said Castle & Cooke, now that it has a big Amfac stake, is likely to seek a role in the development of Amfac’s Hawaiian property. If rejected, Castle and Cooke, led by its chief executive David H. Murdock, may begin a hostile takeover for Amfac, they added.