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The combination of a huge spike in Purina Mills Inc.’s stock price over the past two weeks and the company’s reticence about the identity of a suitor is enough to invite an investigation by Nasdaq as a prelude to any wider U.S. Securities and Exchange Commission action, says a former senior SEC official. Purina’s shares trade on the Nasdaq, whose stock watch normally will investigate to see if a non-Nasdaq member is making purchases leading to such steep rises, said the former SEC official, who asked not to be named. If a non-Nasdaq member is making the purchases, there’s a fair chance the SEC will explore the connection between that buyer and Purina, the official said. “There’s a 95 percent chance that they’ll get caught if anything fishy has been going on,” he said, adding that such investigations usually take from two to five years. A Nasdaq press official said the stock watch conducts such examinations regularly, but she wouldn’t comment on the Purina situation. Purina officials didn’t return calls, but industry sources said it’s suspicious that Tuesday’s mystery bidder followed a price surge. The St. Louis-based company’s Tuesday announcement that it received an offer for the company came after the animal feed maker’s stock enjoyed higher closes for several days in a row. The stock closed at $10 a share April 20, before reaching a 52-week high of $18.30 a share Tuesday. Purina said in a release Tuesday that still several issues must be addressed with the suitor’s proposal, including due diligence and approval by both boards. Though there’s been speculation about rivals Archer-Daniels-Midland Co., ConAgra Inc. and privately-held Cargill Inc. being possible suitors, one banker familiar with agricultural deals said that these companies aren’t normally secretive. “Whoever is running the sale had a leak,” the banker said. “Because of the [stock] run-up here and all the people talking, the SEC could be all over it.” Koch Industries Inc. bought Purina for $670 million. Purina filed for bankruptcy in October 1999. Since emerging from bankruptcy in June, the Food and Drug Administration has slapped the company with warnings. The first involved the sale of animal feed containing banned ingredients that could possibly lead to mad cow disease. A second came in March, with the FDA alleging the company didn’t follow regulations regarding use of medications in animal feed. Copyright (c)2001 TDD, LLC. All rights reserved.

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