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Filed by Smithfield Foods, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: IBP, Inc.
Commission File No. 1-6085
November 16, 2000
FOR IMMEDIATE RELEASE
SMITHFIELD'S LUTER TELLS NATIONAL PORK PRODUCERS COUNCIL
PROPOSED ACQUISITION OF IBP WOULD BENEFIT PORK PRODUCERS
SMITHFIELD, VA, NOVEMBER 16, 2000 - Joseph W. Luter, III, Chairman and CEO of
Smithfield Foods, Inc. (NYSE: SFD), today presented the following remarks at a
meeting of the National Pork Producers Council:
Smithfield Foods believes a strong meatpacking industry benefits hog
producers. By working together, producers and packers can deliver a
consistent, high quality product that meets the increasingly stringent
demands of our customers, be they the giant foodservice companies,
consolidating food retailers, international markets, or individual
shoppers looking for new, value-added meat products.
With beef and pork under one roof, we would be much better positioned
to create new opportunities for producers by expanding our share of
retailers' shelves and offering retailers centralized purchasing and
procurement. We are already seeing this trend play out in the
partnerships McDonald's has with its suppliers, which is a win-win for
all: a consistent, high-quality product for the customer and a steady
and stable market for the producer. To reap the benefits of such
partnerships, however, we need the scale and sophistication to serve
the growing needs of consolidating retail and foodservice giants, and
their customers.
To see how such a philosophy of partnership could work, we need only to
look at other markets where it already exists. In the U.S., where pork
producers and processors are more often than not at odds with one
another, pork lags poultry and beef in market share. In Europe, where
producers and processors work together, pork leads the protein market
handily. By working together, we have the opportunity to do the same
here at home.
For all its benefits, we can appreciate that our proposed acquisition
of IBP raises concerns of market concentration among some farmers and
public officials. In fact, concentration is not really an issue here
because we have a plan for the pro-active divestiture of assets that we
believe will address these concerns.
Beyond that fact, we would like to put to rest once and for all the
misapprehension that meatpackers make money at the expense of farmers.
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o For the nine-year period 1991 through 1999, producers lost money in
only two of nine years, 1994 and 1998, years that saw
over-production as a result of high profits in the preceding years.
By contrast, packers made money in only four of those nine years. In
seven of those nine years, producers made more money per head than
did the packers.
o For the 14-year period, January 1987 through January 2000, the
average monthly profit per head for packers and producers was $18.70
per head for producers and only $2.00 per head for packers.
o For the 1986 through 1998 period, the major share of the pork dollar
went to the farmers and retailers and a minimal amount went to the
packers. (USDA Economic Research Service)
While these points illustrate vividly that meatpackers do not profit at
the expense of livestock producers, we would also like to confront one
other misperception that we believe hurts all of us by fostering the
perception that we hold divergent interests.
We have over $1.2 billion invested in hog production operations and we
own 60% of the hogs we slaughter. In many months we earn significantly
more money from our production business than we do from our packing
business. In sum, as the world's largest hog producer, we have a clear
common interest with other hog producers in ensuring that hog farming
remains a viable economic enterprise.
We think it's time for a reevaluation of our mutual interests and a
frank and open discussion about how we can best work together to our
mutual benefit and to the benefit of our end customers.
With annual sales of $5.2 billion, Smithfield Foods is the leading producer and
marketer of fresh pork and processed meats in the United States. For more
information, please visit WWW.SMITHFIELDFOODS.COM.
CONTACTS:
FOR INVESTORS: FOR MEDIA:
Jerry Hostetter Josh Pekarsky
Smithfield Foods, Inc. Sarah Zitter-Milstein
(212) 758-2100 Kekst and Company
(212) 521-4800
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THIS LETTER MAY CONTAIN "FORWARD-LOOKING" INFORMATION WITHIN THE MEANING OF THE
FEDERAL SECURITIES LAWS. THE FORWARD-LOOKING INFORMATION MAY INCLUDE STATEMENTS
CONCERNING SMITHFIELD'S OR IBP'S OUTLOOK FOR THE FUTURE, THE ABILITY TO REALIZE
ESTIMATED SYNERGIES, AS WELL AS OTHER STATEMENTS OF BELIEFS, FUTURE PLANS AND
STRATEGIES OR ANTICIPATED EVENTS, AND SIMILAR EXPRESSIONS CONCERNING MATTERS
THAT ARE NOT HISTORICAL FACTS. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE EXPRESSED IN, OR IMPLIED BY, THE STATEMENTS. THE FOLLOWING FACTORS, AMONG
OTHERS, COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN,
OR IMPLIED BY, THE STATEMENTS: THE RISKS THAT SMITHFIELD'S AND IBP'S BUSINESSES
WILL NOT BE INTEGRATED SUCCESSFULLY, THE RISK THAT SMITHFIELD AND IBP WILL NOT
REALIZE ESTIMATED SYNERGIES, COSTS RELATING TO THE PROPOSED TRANSACTION, THE
AVAILABILITY AND PRICES OF LIVE HOGS, LIVE CATTLE, RAW MATERIALS AND SUPPLIES,
PRODUCT PRICING, THE COMPETITIVE ENVIRONMENT AND RELATED MARKET CONDITIONS,
OPERATING EFFICIENCIES, ACCESS TO CAPITAL, ACTIONS OF DOMESTIC AND FOREIGN
GOVERNMENTS AND OTHER FACTORS DISCUSSED IN SMITHFIELD'S AND IBP'S RESPECTIVE
FILINGS WITH THE SEC.
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More detailed information pertaining to Smithfield's proposal will be set forth
in appropriate filings to be made with the SEC. We urge stockholders to read any
relevant documents that may be filed with the SEC because they will contain
important information. Stockholders will be able to obtain a free copy of any
filings containing information about Smithfield and IBP, without charge, at the
SEC's Internet site (HTTP://WWW.SEC.GOV). Copies of any filings containing
information about Smithfield can also be obtained, without charge, by directing
a request to Smithfield Foods, Inc., 200 Commerce Street, Smithfield, Virginia
23430, Attention: Office of the Corporate Secretary (757-365-3000).
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such jurisdiction.
Smithfield and certain other persons named below may be deemed to be
participants in the solicitation of proxies. The participants in this
solicitation may include the directors and executive officers of Smithfield. A
detailed list of the names of Smithfield's directors and officers is contained
in Smithfield's proxy statement for its 2000 annual meeting, which may be
obtained without charge at the SEC's Internet site (HTTP://WWW.SEC.GOV).
As of the date of this communication, none of the foregoing participants, other
than Smithfield (which beneficially owns approximately 6.6% of IBP's common
stock), individually beneficially owns in excess of 5% of IBP's common stock.
Except as disclosed above and in Smithfield's proxy statement for its 2000
annual meeting and other documents filed with the SEC including Smithfield's
Schedule 13D relating to the IBP common stock, to the knowledge of Smithfield,
none of the directors or executive officers of Smithfield has any material
interest, direct or indirect, by security holdings or otherwise, in Smithfield
or IBP.
