The acquisition of Domino Sugar by two Cuban exiles who rebuilt their sugar empire in the United States after fleeing Castro's regime was finalized yesterday.
Florida Crystals Corp. of West Palm Beach, owned by Alfonso and J. "Pepe" Fanjul, will control 64 percent of the operation and the Sugar Cane Growers Cooperative of Florida, a group of 56 growers in Palm Beach County, will control the rest. The two parties are paying between $165 million and $185 million for Domino, depending on the refiner's performance.
No layoffs of Domino's 500 employees are expected at the 79-year-old Inner Harbor plant, whose 120-foot red neon sign has warmed the Baltimore skyline for five decades.
"We are proud to have acquired such a widely recognized and well-established consumer brand," said Alfonso Fanjul, 64, chairman and chief executive officer of Florida Crystals. "Integrating the established expertise of Florida Crystals and [the cooperative] with the brand strength and refining capacity of Domino provides a unique industry opportunity that we look forward to capitalizing on."
The Domino brand - and sign - will remain intact and the Baltimore plant, along with Domino facilities in Brooklyn, N.Y., and Chalmette, La., will become part of the American Sugar Refining Co., which will also include Refined Sugars Inc., of Yonkers, N.Y. The Yonkers facility was already owned by Florida Crystals and the cooperative. The combined operation is expected to have annual sales of more than $1 billion.
Florida Crystals is one of the country's dominant sugar-cane growers with 180,000 acres. It produces 750,000 tons of raw sugar every year and accounts for about 40 percent of the cane grown in Florida, and more than 9 percent of the country's cane sugar.
The Domino acquisition means the Fanjuls can more effectively control every facet of the sugar business, from planting and harvesting to refining, packaging and distribution. The brothers are fourth-generation sugar growers who were among Cuba's wealthy elite before Fidel Castro toppled the Batista regime and began confiscating private property. The family fled in 1959 and settled in New York, where they were part-owners in a sugar brokerage company, before moving to Palm Beach and starting a new sugar empire from scratch. Their holdings, which include sugar fields and a luxury resort in the Dominican Republic, now exceed what they had in Cuba.
Intensely active in politics, they are beneficiaries of the federal government's sugar price support program that keeps prices in the United States at least double what they are on the world market.
Cane refiners say the sugar program has been a boondoggle because it means sugar cane and sugar beets are such attractive crops that farmers grow too many of them. In particular, there has been a glut of sugar beets - which are simpler to process than cane - on the market in recent years.
The high sugar-beet supply means prices for the finished product - from cane and beets - have fallen and refiners such as Domino have been losing money on every pound of sugar they sell. Domino's former owners, Tate & Lyle of London, pointed to the price supports as one of the main reasons they were selling the refiner.
"The closing of the Domino Sugar transaction will allow us to further vertically integrate our business," said Pepe Fanjul, 57, vice chairman, president and chief operating officer, "as well as ensure that our customers have a reliable supply of refined sugar and other sugar-related products."