(Crain’s)—Ferrara Pan Candy Co. is in early-stage talks to become a part of Farley’s & Sathers Candy Co., in a deal that would put Ferrara CEO Salvatore Ferrara II at the helm of the combined entity, Crain’s has learned.

Ferrara, a Forest Park-based confectioner known for its Lemonheads and Atomic Fireballs, would sell a majority stake of the $400 million company to Round Lake, Minn.-based Farley’s, according to several people close to the companies.

Farley’s Chicago-based CEO Liam Killeen earlier this week told employees that his company had signed a letter of intent for the tie-up, according to one of the people.

The deal could still fall through. Mr. Ferrara and co-owner Jim Buffardi declined to comment. Neither Mr. Killeen nor other Farley’s executives returned calls for comments.

As part of the plan, Mr. Ferrara would replace Mr. Killeen as CEO, a move that would resolve any question of who is in charge of the business, although he would have a new set of shareholders beyond family members. In May, Mr. Ferrara was ousted and then re-instated in a family and board dispute that included a call to police. At the time, Mr. Ferrara denied any plans to sell, merge or add partners to the company.

On Feb. 3, however, his father and company chairman, Nello Ferrara, died at age 93. His father, Salvatore, founded the company in 1908 and later teamed with brothers-in-law Salvatore Buffardi and Anello Pagano, whose families still own and run the business.

Farley’s is owned by private equity firm Catterton Partners Corp. of Greenwich, Conn., and has estimated sales of $615million from brands including Brach’s, Fruit Stripe gum, and Chuckles. The company in 2010 hired Goldman Sachs to help it find a buyer. Catterton bought the company in 2002 and since then made several acquisitions, including Brach’s Confections in 2007.

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