But the CSR board still favours a public float of Australia's biggest sugar company to maximise investor returns.

Those believed to have started investigating a major investment include: British Sugar, owned by Associated British Foods; the Brazilian sugar cane producer Cosan; the private US group Cargill; and the South Korean food and industrial conglomerate CJ Corporation. A German food group, Suedzucker, is also viewed as a potential bidder.

A document prepared by CSR's advisers, Goldman Sachs JBWere and Lazard Carnegie Wylie, is seeking a cornerstone investor to take a 20 to 25 per cent anchor stake in CSR Sugar in the lead-up to a spin-off and float.

This remains "Plan A" for CSR directors and carries with it a number of tax advantages for shareholders. A demerger coinciding with a new anchor shareholder would also give the new company fresh capital and the backing of a strong international partner as it trades free of the protective 154-year-old CSR conglomerate.

However, directors and their advisers are weighing up the various strategic implications for shareholders of a demerger versus a straight trade sale.

A cornerstone investor with 25 per cent of CSR Sugar would form a blocking stake that could potentially take the "sizzle" out of any future auction for the listed group. This could rob CSR Sugar shareholders of a takeover premium. It is speculated CSR's leading overseas competitors in the sugar industry would prefer to completely own the sugar division rather than sit on the register as a passive investor with 20 to 25 per cent of the issued capital.

A trade sale, or "Plan B", has attracted interest from agribusiness, food and commodity traders. British Sugar is a strong frontrunner and with gearing levels of only 23 per cent has the capacity to pay the estimated $1 billion price for CSR Sugar. It could easily afford a 25 per cent stake. Its parent, Associated British Foods, has a market capitalisation of more than £6 billion ($12.4 billion) and annual sales of £8.2 billion.

The head of communications for British Sugar, Richard Ali, declined to comment yesterday. "It's not our policy to comment on speculation," he said.

A Deutsche Bank analyst, Emily Behncke, said: "Based purely on balance sheet strength, we think British Sugar and Suedzucker could have the capacity to potentially purchase a stake in CSR Sugar."

CSR shares closed 7c higher at $1.64.