Archer Daniels to settle lawsuits for $65 million Company was accused of hiding price fixing

September 28, 1996|By BLOOMBERG BUSINESS NEWS

Archer Daniels Midland Co. agreed to pay $65 million to settle price-fixing lawsuits by its citric acid customers and its shareholders.

The company said it would pay $35 million to resolve the customers' suit and $30 million to settle a class-action suit by investors accusing the company of hiding the fact that it fixed prices on citric acid and other products.

If approved by federal judges in California and Illinois, the payments will be the largest by the company since price-fixing allegations surfaced in 1995. Earlier, the company agreed to pay $25 million to customers of its lysine animal feed supplement.

"Zero would have been a better number, but for a company with $3 billion in cash and equivalents on its balance sheet, it's not so bad," analyst John McMillin of Prudential Securities Research said.

A fourth class-action suit, by buyers of high-fructose corn syrup, is pending. Archer Daniels didn't admit wrongdoing in any of the cases.

The Decatur, Ill., corn and soybean processor is negotiating with the U.S. Justice Department in hopes of avoiding indictments. McMillin said the company is trying to settle civil cases first so if prosecutors insist on an admission of guilt, it won't be used in the suits.

The citric acid lawsuit, in San Francisco's U.S. District Court, was filed by customers including 7Up Bottling Co. of Philadelphia, 7Up Bottling of Stockton, Calif., and Southeastern Specialty Foods.

Other defendants in the case include Cargill Inc., Bayer AG and Hoffman-La Roche. They and attorneys in the case couldn't immediately be reached.

In the shareholder case, investors who owned Archer Daniels shares between September 1992 and July 10, 1995, may either seek payments under the settlement or opt out and pursue individual suits. Tens of thousands of investors are members of the class, said plaintiffs' attorney Lester Levy of Wolf Popper Ross Wolf & Jones in New York.

"It is an excellent settlement," Levy said. The final figure came after a recent round of intense negotiations, he said. Levy said he didn't know if insurance would cover the payout.

The lawsuit said Archer Daniels fixed lysine prices and that the practice artificially inflated the company's sales and profits.

Pub Date: 9/28/96

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