0103102 Shares Of IBP Fall, Tyson's Rise on Merger Collapse

Chicago - Shares of beef and pork processor IBP Inc. lost more than 28% of their value while shares of poultry processor Tyson Foods Corp. rose nearly 14% after Tyson called off its proposed $3.2 billion acquisition of IBP.

IBP stock fell $6.59 to $16.20 in morning trade after a delayed opening on the New York Stock Exchange. Shares of Tyson were trading up $1.55 at $13.05 on the NYSE.

Tyson shares had been expected to rise on the news as arbitragers began to reverse positions, Merrill Lynch analyst Len Teitelbaum said in a research note. He lowered his intermediate-term investment rating to neutral from buy.

Merrill Lynch was a financial adviser to Tyson in the deal.

Tyson said late Thursday it would walk away from the proposed deal, forged late last year, citing “numerous breaches” of the companies' merger agreement that could not be resolved.

In a letter to IBP Chairman Robert Peterson, Springdale, Arkansas-based Tyson said it had relied on misleading information when it entered into the merger agreement.

Tyson's $3.2 billion cash and stock bid had bettered a $3.4 billion stock offer from pork producer Smithfield Foods Inc. and a previously agreed $2.4 billion buyout offer led by the merchant banking arm of Donaldson, Lufkin & Jenrette.

Tyson's bid valued IBP at $30 a share in cash. Smithfield's last bid for Tyson offered $32 a share in stock.

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