001235 Tyson: Cash Offer for IBP Majority

Little Rock, AR - In what company executives called a “next step,” Tyson Foods Inc. said it has started a cash tender offer for a 50.1-percent stake of IBP Inc.

The move was derided by Smithfield Foods Inc. as a “hostile” takeover attempt of the beef and pork producer.

But IBP is urging its shareholders to hold off on making a decision about Tyson's offers until it can examine it in detail.

IBP, in a press release, said it would have a position statement ready for its shareholders within 10 days.

The move comes a week after Springdale, Ark.-based Tyson offered $2.8 billion in cash and stock to acquire Dakota Dunes, S.D.-based IBP, the country's largest producer of beef and second largest producer of pork.

The merger with Tyson and IBP would create a company with 30% of the world's beef market, 33% of the poultry market and 18% of the pork market, a virtual powerhouse in the world meat industry.

Smithfield, Va.-based Smithfield Foods, the world's largest hog producer and processor, made an offer Nov. 12 to purchase IBP for $25 a share in stock.

IBP executives have not made any decisions regarding either offer.

But a statement from Smithfield criticized Tyson's new offer.

Tyson spokesman Ed Nicholson said the offer was “by no means” a hostile takeover.

“We've been communicating in good faith with the Special Committee of IBP's board of directors,” Nicholson said. “And obviously we feel that our offer is better than Smithfield's.”

Smithfield is continuing with its efforts to acquire IBP.

“Fortunately for IBP shareholders, there is a long way to go between now and when Tyson's tender offer is set to expire on January 10,” the company said. “We will continue working through the due diligence process with IBP and the Special Committee and will evaluate our next steps accordingly.”

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