July 28 (Bloomberg) -- Tate & Lyle Plc, Europe's largest cane-sugar refiner, said it paid $100 million to settle a U.S. lawsuit alleging it conspired to fix prices for high-fructose corn syrup, a sweetener used in food and drink.

The case was brought against Tate & Lyle's A.E. Staley Manufacturing Co. unit and will result in a posttax charge of $60 million on Tate & Lyle's earnings.

``I'm sure the company was unhappy at the thought of paying that $60 million,'' Julian Hardwick, an analyst in London with ABN Amro, said in a telephone interview. ``The alternative was going to court and possibly having to pay a substantially higher amount of money.''

Tate & Lyle shares rose as much 6.2 percent as the company also said it expected pretax profit in the quarter ended June 30 was higher than a year ago, as ``all major businesses have met or exceeded plan.''

The suit was filed in 1995 on behalf of food companies including Coca-Cola Co. and PepsiCo Inc., the world's top two soft-drink makers. Damages claimed amounted to $1.4 billion, which could have been tripled. Archer Daniel Midlands Co. and Cargill Inc., the other defendants in the case, have already settled, with payments totaling $424 million.

Shares Rise

A.E. Staley has 22 percent of the U.S. market for high- fructose corn syrup, according to Credit Suisse First Boston. Archer Daniels, based in Decatur, Illinois, has 33 percent and closely held Cargill controls 32 percent. Archer Daniels owns about 6 percent of London-based Tate & Lyle.

Tate & Lyle's shares rose 14.25 pence, or 4.6 percent, to 321.75 pence at 12:36 p.m. in London. They have gained 3.3 percent this year, valuing the company at 1.55 billion pounds ($2.8 billion).

``Staley continues to deny emphatically involvement in any wrongdoing, but has settled with great reluctance to ensure an end to this lengthy action and to avoid the risk and uncertainty that a U.S. jury trial would involve,'' London-based Tate & Lyle said in a Business Wire statement.

A group of U.K. members of Parliament earlier this month recommended that Tate & Lyle and British Sugar should be investigated by the U.K. antitrust watchdog for dominating the U.K. sugar market, unless the European Union scraps production quotas for sugar.

U.K. Investigation

The Office of Fair Trading says it's considering a request for a probe of the U.K. sugar industry, filed in April 2003 by the U.K.'s Biscuit, Cake, Chocolate & Confectionery Association that represents companies such as Kraft Foods Inc., Nestle SA, Mars Inc., Cadbury Schweppes Plc and Wm. Wrigley Jr. Co.

Tate & Lyle's Silvertown refinery in East London accounts for about 40 percent of all sugar made in the U.K. The other 60 percent is produced by beet-processor British Sugar, a unit of Associated British Foods Plc.

The antitrust settlement, though higher than expected, was offset by ``positive'' business outlook, said Citigroup analysts led by Jayshree Venkatramani said in a note. Citigroup has a ``Hold'' recommendation for the stock.

Tate & Lyle said it will spend another 24 million pounds to expand its plant in McIntosh, Alabama that makes sucralose, a calorie-free sweetener. It announced an extra 16 million pound investment in June. The company spent 137 million pounds to buy Johnson & Johnson's McNeil Nutritionals sucralose business in February.

Tate & Lyle doesn't report quarterly profit. Net income in the year ended in March was 154 million pounds on sales of 2.87 billion pounds. Its annual meeting of shareholders will be held tomorrow in London.

To contact the reporter on this story: Peter McGill in London on at pmcgill1@bloomberg.net and Stuart Wallace in London swallace6@bloomberg.net

Last Updated: July 28, 2004 07:52 EDT