Tyson Foods To Buy IBP for $3.2B

SIOUX FALLS, S.D. (AP) — Tyson Foods Inc. has reached a deal to buy meat processor IBP Inc. for $3.2 billion in cash and stock, defeating rival suitor Smithfield Foods in a bidding battle for the huge

Tuesday, January 2nd 2001, 12:00 am

By: News On 6


SIOUX FALLS, S.D. (AP) — Tyson Foods Inc. has reached a deal to buy meat processor IBP Inc. for $3.2 billion in cash and stock, defeating rival suitor Smithfield Foods in a bidding battle for the huge beef and pork packer.

Tyson spokesmen said the purchase will triple Tyson's annual sales to an estimated $24 billion a year and make it the nation's leading poultry, beef and pork producer in the nation.

The deal announced Monday was reached during the weekend and approved by a special committee of IBP directors. Tyson will also assume $1.5 billion in debt.

``We believe IBP and Tyson will make a strong team,'' Robert L. Peterson, IBP chairman and chief executive, said in a statement.

The transaction, which is subject to regulatory and shareholder approval, will likely be final sometime during the first quarter of the year, said Tyson spokesman John Lea.

Springdale, Ark.-based Tyson will pay $30 in cash and Tyson stock for each share of IBP. On Friday, Tyson had offered $27 per share, or about $2.9 billion.

Tyson and Virginia-based Smithfield, the world's largest hog producer and processor, had been vying to gain control of IBP, based in Dakota Dunes, S.D.

In a statement issued Monday night, Smithfield Foods chairman Joseph W. Luter III said it offered $32 per share in stock for IBP over the weekend, but the offer expired at noon on Monday with no word from IBP.

``We believe that our offer was a full and fair price for the company,'' Luter said.

In early trading Tuesday on the New York Stock Exchange, IBP shares jumped $1.13 to $27.88, while Tyson slumped 9.3 percent, or $1.19 a share, to $11.56. Smithfield shares held steady at $30.40 a share.

IBP, which bills itself as the world's leading producer of fresh beef and pork, employs about 50,000 people. It also makes prepared foods for the retail and food service industries.

Tyson is the nation's largest poultry producer and has about 68,000 workers. Tyson has operations in 18 states and 15 countries and exports to 73 countries.

Andrew P. Wolf of BB&T Capital Markets said last month that a Tyson-IBP merger would create a company with 30 percent of the beef market, 33 percent of the chicken market and 18 percent of the pork market.

Critics in farm country have said such deals increase the concentration of food production in the hands of fewer companies.

``What people are afraid of is that there's going to be a disruption or that corporate farms are going to drive independent farmers out of business,'' Tyson spokesman Lea said. ``We have no intention of setting up corporate farms or vertically integrating beef and pork operations at IBP.''

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On the Net:

IBP: http://www.ibpinc.com

Tyson: http://www.tyson.com

Smithfield: http://www.smithfield.com
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