Tyson, IBP, Courts Set Deadlines for Merger

The long-delayed merger between Tyson Foods Inc. and IBP Inc. is finally underway, with the parties setting different deadlines for the deal’s completion.

John Tyson, president, chairman and CEO of Springdale-based Tyson Foods, said Wednesday that the merger between Tyson and IBP would be completed no later than Sept. 1.

The Delaware Chancery Court said the cash tender offer should be consummated by Aug. 15, and if the merger is not completed by Nov. 15 “for any reason, IBP shall be entitled to move for an award of interest and/or an adjustment to the financial terms of the consideration to be paid to IBP shareholders.”

Then there is the deadline set forth for the cash tender offer to begin by July 5. Vice Chancellor Leo E. Strine Jr. of the Delaware Chancery Court said Tyson must commence its tender within five business days of Wednesday’s order. And that tender offer — Tyson buying 50.1 percent of IBP shares at $30 each and the rest exchanged at 2.381 Tyson shares for each IBP share — must be completed by Sept. 1.

This new offer, which is a $2.72 billion Tyson buyout of IBP and a $1.7 billion assumed IBP debt, is to remain open for 20 business days.

But if Tyson’s stock — currently at about $9.05 a share — rallies above $12.60 a share, then the exchange ratio would be between 1.948 and 2.381 Tyson shares, depending on Tyson’s stock price.

At the open of market Wednesday, Tyson (NYSE: TSN) was at $8.98 a share and IBP at $23.10 a share. By mid-morning Thursday, Tyson had risen 7 cents while IBP had vaulted $1.93 per share to $25.03.

Butchers Worry

Meanwhile, butchers across the nation are worried the merger will hurt the industry with more prepackaged beef and less demand for skilled butchers.

“We already have case-ready chicken,” said analyst John M. McMillin of Prudential Securities. “Now we’ll see more beef that way instead of butchers in the supermarket.”

Little Rock butcher Fred Tisdale, who owns Aletter’s Old Fashioned Meats, is a 30-year veteran of the beef industry.

“[The merger] will cut into my business a little bit,” Tisdale said. “I already knew this was coming. Few people know how to break down beef from the carcass anymore.”

John Tyson said the merger will help create the “world’s leading protein provider.”

In fact, Tyson will now manage 28 percent of the beef market, 25 percent of the poultry market and 18 percent of the pork market.

“A more dynamic company is being put together,” Prudential Securities analyst Jeffrey Kanter said. “If managed well, Tyson will be a better company.”