010321 Tyson Purchase of IBP Still On

Little Rock, AR - Tyson Foods Inc. said it will continue with its plan to purchase meatpacking giant IBP Inc., though the process became more complicated when Tyson announced that it would not meet a deadline for the cash portion of its $3.2 billion offer.

IBP and Tyson each said they want to continue to pursue the deal, which has already received Justice Department approval. Already the nation's leading poultry producer, the merger would also make Tyson top beef and pork producer.

"IBP continues to work with the Securities and Exchange Commission to resolve their accounting issues. After that work is complete, we will determine what effect these matters will have on our deal," John Tyson, president of the Springdale-based poultry company, said.

Tyson reached a deal Jan. 1 to buy South Dakota-based IBP for $3.2 billion, half in cash and half in stock. Instead of paying the cash portion of the $30 per share offer by the deadline and the rest at the deal's closing, expected May 31, Tyson now will pay the cash and stock all at once when the deal is complete, analysts said.

The deal would have had Tyson assume $1.2 billion of IBP's debts.

John M. McMillin of Prudential Securities Inc. in New York said in a research report Wednesday, that while Tyson's offer stands at $30 per share, the ultimate price could drop once IBP's filings are complete.

"We believe that this is now the beginning of a potential adjustment to the price, to the tune of a buck or two ($28-$29 per share) due to the earnings restatements, which works up to about $1-$1.50 per share," the analysis said. "Keep in mind that (Tyson) can't go much lower otherwise it may risk losing the company to Smithfield Foods."

Smithfield had earlier been in the running to acquire IBP but withdrew.

IBP officials have not revealed specific details of the SEC's inquiry but said the questions involved previous account filings and acquisitions by IBP.

"IBP continues to work diligently to resolve issues raised by the SEC. We are pleased to report we continue to make significant progress and hope the matter can be completed soon," IBP said Wednesday.

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