December 5, 2000

Tyson Foods Inc., the world's largest poultry producer, has bid $2.8 billion for meat-packing giant IBP Inc. The offer comes within a few weeks of pork industry leader Smithfield Inc. making its $2.7 billion offer for IBP.

FARM JOURNAL says Tyson wants to acquire all of IBP's outstanding common stock through a part-cash, part-stock transaction. Under the proposal, IBP shareholders will receive $26 for each share of IBP common stock, with 50% of the consideration in cash and 50% in Tyson Class A common stock.

The Tyson bid brought a reaction from Sen. Charles Grassley (R-IA). "I've expressed my concern about several recent offers to buy IBP. The latest from Tyson Foods is just as worrisome to me. I'm concerned that the proposal will increase the amount of concentration in the meat packing industry to the point where it will hurt the independent farmers trying to get fair prices for their products."

Tyson's already large presence in the retail market might also affect the prices consumers pay at the meat counter, Grassley added. "I will continue working to ensure that regulatory bodies give all of these offers careful examination and be certain that the federal laws are fully enforced. I have done with previous proposals, I will be sending a letter today to the Justice Department and Federal Trade Commission asking for cautious consideration of the Tyson Foods offer."

The proposed transaction would have a total value of approximately $4.2 billion, including the assumption of $1.4 billion of IBP debt. Tyson says it offers the best deal

Tyson is the third company in less than two months to bid on IBP, according to the FJ article. On Oct. 1, IBP had agreed to a leveraged buyout of $22.25 a share by Donaldson Lufkin & Jenrette. By mid-November, Smithfield Foods increased the stakes and offered IBP shareholders $25 a share. The article says John Tyson, Tyson's chairman, president and chief executive officer, said this a rare opportunity to acquire a business that will make Tyson the world's leading marketer of beef, pork and chicken.

"We feel our proposed transaction represents superior value for IBP shareholders, as Tyson is an experienced transaction partner with a strong balance sheet," Tyson said. "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 added that the proposed deal has a far higher degree of certainty for IBP shareholders, since it is unlikely to "draw the harsh criticism and likely regulatory scrutiny already being directed towards the Smithfield offer."