Sydney Johnson Besthoff III, a New Orleans businessman and art connoisseur who led a seven-state drugstore chain right until he offered it in 1997, died Saturday at his New Orleans dwelling of heart failure, the relatives stated. He was 94. He was the third era to run Katz & Besthoff Ltd., which his grandfather, Sydney J. Besthoff, started with Gustave Katz at 732 Canal St. in 1905. By the time of the sale to Rite Aid Corp., K&B, as it came to be acknowledged, operated 200 merchants with about 4,500 staff members and did about $750 million in organization each year, his wife, Walda Besthoff explained, introducing that the K&B…