Tyson Foods Offers $2.8B for IBP

Monday, December 4th 2000, 12:00 am

By: News On 6

SPRINGDALE, Ark. (AP) â€” Poultry giant Tyson Foods Inc. has made a $2.8 billion cash-and-stock offer to buy IBP Inc., the country's largest producer of beef and second-largest producer of pork. Tyson would also assume $1.4 billion in IBP debt.

Shares of IBP jumped 9 percent on the news, while Tyson shares dropped 9.4 percent.

The country's largest poultry producer said Monday that a merger of the two companies would result in the world's largest marketer of beef, pork and chicken.

John Tyson, Tyson chairman, president and CEO, said the offer was superior to competing bids made by Virginia-based Smithfield Foods Inc. and a group including IBP senior management.

``We envision that the IBP organization will continue to operate its business much as it has in the past, and we are not faced with the problem of having to shut down overlapping production facilities,'' Tyson said.

``Additionally, our proposal has a far higher degree of certainty for IBP shareholders in that it is unlikely to draw the harsh criticism and likely regulatory scrutiny already being directed toward the Smithfield offer.''

Messages left for IBP and Smithfield representatives were not immediately returned.

Under the Tyson proposal, IBP shareholders would receive $26 for each of their common shares. Half would come in the form of cash; half would be in stock. Also, as part of the deal.

Tyson said the offer was not conditioned upon it getting financing for the deal. The company said it could finance the cash portion from already available sources.

On Nov. 12, Smithfield Foods made an unsolicited proposal to South Dakota-based IBP for $25 a share in stock.

The previous month, IBP entered a merger agreement for a leveraged buyout at $22.25 in cash per share by a group comprised of affiliates of Donaldson Lufkin & Jenrette, some members of IBP senior management, Archer Daniels Midland Company and Booth Creek Partners.

In morning trading Monday on the New York Stock Exchange, IBP stock was up $2.06 to $24.81; Tyson shares were off $1.32 at $12.69.

Smithfield shares were up $1.54, or 5 percent, to $30.10, also on the Big Board.