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IBP to consider offer
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December 12, 2000: 12:06 p.m. ET
IBP to evaluate Tyson Foods' tender offer and advise investors in 10 biz days
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NEW YORK (CNNfn) - IBP Inc. plans to make an announcement regarding Tyson Foods' $1.4 billion cash tender offer for 50.1 percent of the meatpacking company in 10 business days.
Tyson commenced the $26-per-share offer Monday as the first part of a $2.8 billion cash-and-stock bid it made last week.
IBP said in a statement Tuesday it will evaluate the offer and then advise stockholders of its position. The Dakota Dunes, S.D.-based company urged shareholders not to accept or reject the offer until they are informed of IBP's position.
 IBP's negotiating committee said last week it was "pleased" to receive Tyson's acquisition bid, but expressed concern about the stock swap "collar."
The collar is designed to protect IBP (IBP: Research, Estimates) shareholders from fluctuations in Tyson's share price and maintain the proposal's intrinsic valuation of IBP at $26 per share. However, the collar limits the number of shares Tyson (TSN: Research, Estimates) would exchange for each IBP share to a maximum of 2.063 shares, meaning that IBP's valuation would fall below the $26-per-share level if Tyson trades below $12.60.
John Tyson, Tyson's chairman, president and CEO, said in a statement the company has begun a due diligence process and already identified $100 million in annual synergies.
Last month, IBP received a $2.6 billion all-stock offer from Smithfield that valued IBP at $25 per share. That deal, however, has drawn harsh scrutiny from some regulators and farming organizations due to fears it would create a player that would be too dominant in the beef and pork industry, where it would hold a market share of greater than 30 percent.
Analysts were also wary of the Smithfield offer because it offered IBP no chance to walk away from the transaction if Smithfield's stock fell below $28.46 per share -- a level the stock only surpassed last Friday for the first time since it made the IBP bid.
Shares of Tyson dropped 50 cents to $11.75 on the New York Stock Exchange, while IBP dropped 31 cents to $25.56.
The offer officially expires Jan. 10, 2001. 
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Tyson Foods
IBP Inc.
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