Staley drops Collins distribution acquisition, can't close deal - Collins Foods International, Staley Continental Inc

Staley drops Collins distribution acquisition, can't close deal

Restaurant chain operator Collins Foods International will not sell its wholesale distribution subsidiary to Staley Continental Inc. because of the inability of the two firms to agree on terms.

Staley is parent of the Chicago-based distribution giant CFS Continental.

An agreement in principle between the companies was disclosed last month. Proposed terms were not revealed, and neither company offered a definitive explanation for the canceled purchase pact.

Staley made "a good offer' and is "sorry the deal didn't work out,' said Thomas Haas, executive vice president of CFS Continental.

"We just were unable to agree on terms,' noted Christopher Thomas, Collins Foods vice president. "We're still looking for alternative deals,' he added, declining further comment.

Los Angeles-based Collins Foods operates about 950 restaurants, about half of which are in California. The firm is parent of the Sizzler, Naugles and Kentucky Fried Chicken of California chains and is majority owner of the Ed Debevic's Short Orders Deluxe concept.

Its Orange, Calif.-based distribution arm, Collins Foodservice, posted sales of $270 million last year. The subsidiary services accounts in 10 Western states through six distribution centers.

Informed sources said Staley was attracted to the proposed sale largely because of the diversity of Collins Food-service's accounts. The sources said a chief lure was Collins' own Kentucky Fried Chicken franchise, which would have opened the door for CFS Continental to sell to other KFC operations.

Last month Collins described the then-pending sale as part of a strategic realignment that would permit it to concentrate on its higher-margin restaurant holdings. The sale would also have helped Collins maximize the efficiencies it enjoys from its multi-chain management synergy and manpower "transferability,' according to Collins Foods president Richard Bermingham.

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