Tyson Foods to Buy Beef/Pork Giant IBP

S I O U X  F A L L S, S.D., Jan. 2 -- Tyson Foods has reached a deal to buy meat processor IBP for $3.2 billion in cash and stock, defeating rival suitor Smithfield Foods in a bidding battle for thehuge beef and pork packer.

Tyson spokesmen said the purchase will triple Tyson’s annualsales to an estimated $24 billion a year and make it the nation’sleading poultry, beef and pork producer in the nation.

The deal announced Monday was reached over the weekend andapproved by a special committee of IBP directors. Tyson will alsoassume $1.5 billion in debt.

“We believe IBP and Tyson will make a strong team,” saidRobert L. Peterson, IBP chairman and chief executive in astatement.

The transaction, which is subject to regulatory and shareholderapproval, will likely be final sometime during the first quarter ofthe year, said Tyson spokesman John Lea.

The Winning BidSpringdale, Ark.-based Tyson will pay $30 in cash and Tysonstock for each share of IBP. On Friday, Tyson had offered $27 pershare, or about $2.9 billion.

Tyson and Virginia-based Smithfield, the world’s largest hogproducer and processor, had been vying to gain control of IBP,based in Dakota Dunes, S.D.

In a statement issued Monday night, Smithfield Foods ChairmanJoseph W. Luter III said his company offered $32 per share in stock for IBPover the weekend, but the offer expired at noon on Monday with noword from IBP.

“We believe that our offer was a full and fair price for thecompany,” Luter said.

IBP, which bills itself as the world’s leading producer of freshbeef and pork, employs about 50,000 people. It also makes preparedfoods for the retail and food service industries.

Expanding the Market ShareTyson is the nation’s largest poultry producer and has about68,000 workers. Tyson has operations in 18 states and 15 countriesand exports to 73 countries.

Andrew P. Wolf of BB&T Capital Markets said last month that aTyson-IBP merger would create a company with 30 percent of the beefmarket, 33 percent of the chicken market and 18 percent of the porkmarket.