Florida Crystals, a privately held company, is a subsidiary of Sun-Flo Inc., wholly owned by the Fanjul family of Palm Beach.

Margaret Blamberg, spokeswoman for Domino Sugar in New York, told Dow Jones Newswires that company policy precludes her from commenting "over the rumors that are going on in the market."

Florida Crystals spokesman Jorge Dominicis didn't return calls seeking comment.

But Tate & Lyle's chief executive Larry Pillard said last week, in conjunction with the company's announcement for the 2001 fiscal year results, that Tate & Lyle North American Sugars was in "advanced negotiations" to sell its U.S. sugar company Domino. He said there here was still "work to be done," but noted the company "wouldn't want (the sale) to go on too much longer."

Domino, a brand sold nationwide, has sugar refineries in New York City, Chalmette, La., and Baltimore.

Talk that Florida Crystals was pursuing Domino has been circulating in the market for months. And when Texas-based Imperial Sugar Co., the largest marketer of refined sugar in the U.S., filed for bankruptcy Jan. 16, that strengthened the Florida suitor's bargaining power, observers say.

"Their strategy has been a smart one," commented a trader in New York familiar with the deal. "They waited until the (dire) situation in the U.S. industry became clear so they wouldn't have to pay more than they had to."

Officials from Florida Crystals "have been visiting the refineries, looking at the books," said a second source, who also requested anonymity. "It wouldn't be surprising if they close the deal, but I think it's going to take a while," until they iron things out.

Overproduction of sugar in the U.S. resulting from a high government-supported domestic price for raw sugar has put several sugar cane refineries under financial stress.

Under its current restructuring efforts, Imperial Sugar has sold off several company operations. Recently it sold its Diamond Crystal Brands and is expected to close the sale of its Michigan Sugar Co. by the fall to a newly formed growers' cooperative, Michigan Sugar Beet Growers, Inc.

Buy Will Make Fanjuls U.S. Third Largest Player

Sources wouldn't disclose a price tag for the deal. Tate & Lyle's U.S. assets, including Domino and Western Sugar Co., were recently valued at GBP300 million, a company spokesman told Dow Jones Newswires, although that may have declined because of poor market conditions.

Tate & Lyle bought Domino in 1988, paying $305 million.

The company said last Thursday that it has sold its Western Sugar unit to the Rocky Mountain Sugar Growers Cooperative for an initial consideration of $96 million. A further maximum consideration of $30 million will be payable after June 2003, subject to performance targets based on sales revenues being met.

In its results last week, Tate & Lyle said its U.S. sugar operations incurred a GBP20 million loss before interest during the year.

"I'd be surprised if (Florida Crystals) pays more than $120 million" for Domino's operations, said the first trader. "Everybody knows that it will take them at least 18 months to turn the company around," he said.

Domino brands offer "a great label and three key locations," said Dalton Yancey, executive vice president of the Florida Sugar Cane League in Washington, which represents Florida Crystals and the Belle-Glade co-op. But its overall attraction "will depend on how much it's sold for."

It's unclear if Florida Crystals would acquire Tate's unit by itself or in a joint-venture with Belle Glade- based Sugar Cane Growers Cooperative of Florida. The companies joined forces to buy Refined Sugars Co. of Yonkers, N.Y., in 1998 for $65 million.

Florida Crystals has 3,000 employees and operates three sugar mills, two renewable energy plants, a rice mill and a packaging distribution center.

The company farms 180,000 acres of land. It produces over 750,000 tons of cane sugar a year, and owns the Okeelanta refinery in Palm Beach, Fla.

If the Fanjuls end up buying Domino, that would make them the third largest player in the U.S., behind Imperial Sugar and the United Sugars Corp., a marketing entity that represents producers at the Red River Valley Sugarbeet Growers Association and Florida-based U.S. Sugar Corp.