<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
SCHEDULE TO
(RULE 14d-100)
Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1) of
the Securities Exchange Act of 1934
(AMENDMENT NO. 1)
IBP, INC.
(Name of Subject Company)
LASSO ACQUISITION CORPORATION
TYSON FOODS, INC.
(Name of Filing Persons-Offeror)
COMMON STOCK, PAR VALUE $.05 PER SHARE
(Title of Class of Securities)
_______________
449223106
(Cusip Number of Class of Securities)
LES BALEDGE
TYSON FOODS, INC.
2210 West Oakland Drive
Springdale, Arkansas 72762
Telephone: (501) 290-4000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Filing Persons)
Copies to:
Mel M. Immergut
Lawrence Lederman
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, New York 10005
Telephone: (212) 530-5732
CALCULATION OF FILING FEE
Transaction valuation* Amount of filing fee
$1,360,751,011 $272,150.20
* Estimated for purposes of calculating the amount of the filing fee only.
The amount assumes the purchase of a total of 52,336,577 shares of the
outstanding common stock, par value $0.05 per share, of IBP, inc., at a
price per Share of $26.00 in cash. Such number of Shares, together with
the 574,200 shares owned by Tyson Foods, Inc., represents approximately
50.1% of the 105,610,334 Shares of IBP, inc. outstanding as of November
1, 2000 (as reported in IBP, inc.'s Form 10-Q for the 39 weeks ended
September 23, 2000).
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[X]Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: 272,150.20 Filing Party: Tyson Foods, Inc.
(Offeror Parent) and Lasso
Acquisition Corporation
Form or Registration No.: Schedule TO Date Filed: December 12, 2000
[_] Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[X]third-party tender offer subject to Rule 14d-1.
[_]issuer tender offer subject to Rule 13e-4.
[_]going-private transaction subject to Rule 13e-3.
[_]amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer. [_]
AMENDMENT NO. 1 TO TENDER OFFER STATEMENT
This Amendment No. 1 to the Tender Offer Statement on Schedule TO (the
"Schedule TO") relates to the offer by Lasso Acquisition Corporation, a
Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Tyson
Foods, Inc. ("Tyson") to purchase the number of outstanding shares of
common stock, par value $.05 per share (the "Shares"), of IBP, inc., a
Delaware corporation ("Company"), which, together with the Shares owned by
Tyson, constitutes 50.1% of the outstanding Shares at $26.00 per Share, net
to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated December 12, 2000 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the
"Offer"). The item numbers and responses thereto below are in accordance
with the requirements of Schedule TO.
Item 12. Exhibits.
(a)(1) Offer to Purchase dated December 12, 2000.*
(a)(2) Letter of Transmittal (including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9).*
(a)(3) Notice of Guaranteed Delivery.*
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.*
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.*
(a)(6) Form of summary advertisement dated December 12, 2000.*
(a)(7) Press Release issued by Tyson dated December 11, 2000.*
(a)(8) Tyson Conference call dated December 12, 2000.
(d)(1) Confidentiality Agreement between Parent and the Company dated
December 4, 2000.*
(d)(2) Proposed form of Merger Agreement to be entered into by and among
Tyson, Purchaser and the Company.*
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
TYSON FOODS, INC.
/s/ LES BALEDGE
--------------------------
(Signature)
Les Baledge, Executive Vice
President and General Counsel
------------------------------
(Name and Title)
December 12, 2000
------------------------------
(Date)
LASSO ACQUISITION CORPORATION
/s/ LES BALEDGE
------------------------------
(Signature)
Les Baledge, Executive Vice President
-------------------------------------
(Name and Title)
December 12, 2000
-------------------------------------
(Date)
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EXHIBIT INDEX
Exhibit No.
-----------
(a)(1) Offer to Purchase dated December 12, 2000.*
(a)(2) Letter of Transmittal (including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9).*
(a)(3) Notice of Guaranteed Delivery.*
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.*
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.*
(a)(6) Form of summary advertisement dated December 12, 2000.*
(a)(7) Press Release issued by Tyson dated December 11, 2000. *
(a)(8) Tyson Conference call dated December 12, 2000.
(d)(1) Confidentiality Agreement between Parent and the Company dated
December 4, 2000.*
(d)(2) Proposed form of Merger Agreement to be entered into by and among
Tyson, Purchaser and the Company.*
* Previously filed on December 12, 2000 with the schedule TO filed by
Tyson Foods, Inc. and Lasso Acquisition Corporation.
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Exhibit(a)(8)
TYSON FOODS
December 12, 2000
9:30 a.m. CST
Coordinator Thank you all for holding. I would like to remind everyone
that you will be on a listen-only mode until the question
and answer portion of today's call. Today's call is being
recorded on behalf of Tyson Foods. If you have any
objections, please disconnect at this time. I would like to
turn the call over to Mr. Gottsponer, Director of Investor
Relations.
L. Gottsponer Thank you, Kevin. Good morning, and thank you all for
joining us here today to talk about the commencement of our
cash tender offer for IBP.
With me this morning are John Tyson, our Chairman, President
and CEO; Greg Lee, our COO; and Steve Hankins, our CFO.
In just a few moments, we are going to hear some remarks
from both John and Steve, and then we will take some
questions. However, since we are here to talk about the IBP
transaction, we won't be taking questions on our existing
chicken business.
Also, I want to remind you that some of the things we are
going to talk about today are going to be forward-looking
statements. That means those statements are subject to
risks and uncertainties which could cause actual results to
vary. So, I want to encourage you to review the list of
those risks and uncertainties in yesterday's press release.
So, with that, I'll turn it over to John Tyson.
J. Tyson Well, good morning, everybody. I thank you for your time
this morning to let us share with you our thoughts about
the great opportunity that exists between Tyson Foods and
the great folks at IBP.
When you think about this combination, the first thing that
comes to mind is the uniqueness of it. The once in a
lifetime opportunity to create the world's largest marketer
of poultry, beef and pork into the retail sector, into the
food service sector, into the club store sector, and, of
course, internationally.
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With Tyson, we have the unparalleled ability to develop
branded food products and market them successfully through
all those distribution channels. With IBP, you see the
leader out there in the beef and pork sector who's poised to
enter into those distribution channels, as they have worked
very hard to upgrade their product mix. When you put Tyson
and IBP together, what you're getting is not only the
operational excellence of the two companies, but you're
getting the market product development leaders within the
sector. Combined with us, we believe we will be able to
take the IBP concept and accelerate it through the food
service distribution system, through the retail distribution
system, and through the club store distribution.
Together, we're positioned to capture a significant market
in developing those products, both beef and pork, for those
customers. It also allows us the ability to manage the
entire meat case for customers. When you think about that,
I get the vision that, instead of just being a sub-segment
of the protein category with poultry only, we will now have
all three of the major proteins within the protein category.
To a degree, we will have the Proctor & Gamble effect of
managing a whole category. So, when we go to a customer in
food service, or we go to a customer in retail, or we go to
a customer in club stores, we can get in there and say let's
manage your whole protein category. Let's work together as
partners. Because as the retail business consolidates, as
the food service business consolidates, and as the club
store business has great competitors out there, we will be
better positioned, Tyson Foods and IBP together, to go to
those customers and manage the whole category on a go-
forward basis.
The only reason we are going to be able to manage that whole
category on a go-forward basis is there are two strong
management teams in place. When you look at the team that
has been created at IBP, they understand their business,
they are low cost producers, they have spent the time and
the money to position themselves to start the work on
upgrading their product mix. We went and visited with the
IBP management team last Friday, and we are starting to see
substantial synergies, and we will speak to those a little
bit later on in our conference call. I think when you look
at the models out there, you will see what it will do for
our earnings per share, and you will see what it will do for
cash flow on a go-forward basis.
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So, when you look at the combination and the uniqueness of
Tyson and IBP and what we can do together in the
marketplace, with our leadership position on how to service
customers, how to sell customers, how to take products to
the customer place, married with the scale of IBP in beef
and pork, you can see the acceleration of opportunities and
you can see the acceleration. We get more enthused each and
every day when we look at the combinations. Then, when you
add in the food brands component of IBP and the wonderful
brands that they have over there, and some of the leadership
positions they have there on these regional brands that we
can then fold out into our national distribution, you see
the opportunity for margin enhancement and you see the
opportunity for sales growth.
With that, I want to turn it over to Steve. He is going to
speak to you on some of the financials as we move forward,
and then, after that, we will take some questions and look
forward to an open dialogue with each and every one of you.
S. Hankins Good morning. I want to speak to a couple of things. The
first being discussion of the synergies that we have
identified. We are well into the due-diligence process, as
you would expect, from the fact that we have commenced the
cash tender today. We have met with the management, we have
discussed and compared strategy and operations, and we feel
like we have identified at this first cut several areas of
synergies that we can attack. We expect those synergies to
range in the neighborhood of $100 million on an annualized
basis. We expect to achieve half of those in the first
twelve months of operation and move very quickly in the next
twelve months to the full $100 million.
As you might expect, we find these synergies in a number of
areas. Tyson has a history of acquisitions. We have bought
several major companies in the past. We have worked through
synergy issues many, many times and have a good base of
experience to draw from to identify synergies. Of course,
you look in obvious categories, and so we have identified
procurement, G&A support services, logistics and supply
chain areas as areas of synergy.
As we look in procurement, there are opportunities certainly
in packaging material. A simple statement of fact is that
Tyson and IBP both are among the largest users of corrugated
in the nation. We use separate vendors today. Maintenance
and repair items, an area that Tyson has been focused on in
the last couple of years, we continue that focus. Operating
supplies, rolling stock, and our focus that we have on
energy cost management, all we think will play very, very
well.
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As you look in G&A support services, public company
expenses, corporate accounting, audit fees, and those sort
of things, leveraging information technology is a theme that
we see that plays throughout IBP/Tyson combined operations.
Risk management is another area that we see possible
synergies in.
Logistics and supply chain, transportation and warehousing,
both are core strengths of Tyson Foods. Whether it is
traffic planning and fleet operations, our abilities
internationally and the way we handle ocean freight, and the
synergies the combined companies would have in regard to
that, warehousing operations is where we are very strong
with information technology. We are able to take orders
electronically, and view inventory and such things, combined
with capabilities IBP already has, we believe that there are
synergies there.
As we think about the food brands companies, and food brands
being primarily food service-oriented type of companies,
this plays very strongly into the core strength of Tyson
Foods which is food service. We've had a strong experience
in integrating companies and finding synergies around those
types of companies. So, as we look at the food brands
companies combined with Tyson's food service background,
combined with Tyson's information technology base that we
already have established, combined with Tyson's supply chain
capabilities, we see very strong synergies particularly in
that area.
As you look at sales and marketing, and what John alluded
to, there are top line leverage opportunities that we have
in sales and marketing, related in going to the customers.
So, a number of areas, we have looked very hard at those.
Not going to go into specific numbers in specific areas, but
we have taken a very hard look to date, based on
conversations with management and our background in
combining companies, to come up with those numbers.
The second topic I would like to talk about is why we are
doing the cash tender at this point in time and some basics
about our offer that we feel are very important for you to
understand.
The reason why we are doing the cash tender now is that we
are basically ready to go. We are well into the due-
diligence process, and we are very prepared to make this
offer today.
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This offer also starts the clock running as to regulatory
issues. We have a high degree of confidence in this offer
in regards to the regulatory issues that might be raised.
We feel like we will get through the process quickly, within
15 to 30 days, and we want to get that clock started. We
feel that a long, drawn out process of this is not in the
best interest of anyone, particularly the management,
employees of IBP, their suppliers and their vendors, and so
forth. We think that a long, drawn out process is not in
their best interest.
What we provide in this deal is certainty. We can make the
cash tender offer today, we get the clock running on
regulatory issues, we feel very confident within 15 to 30
days that we will be past that hurdle. Our offer brings
certainty in the cash component that we bring to the table.
The cash tender today certainly is evidence of that. We are
moving very, very quickly through the process. We feel that
for a large number of reasons that Tyson is uniquely
positioned to bring shareholder value in this deal compared
to the other alternatives on the table.
When you look at financials on a go-forward basis, and we've
talked about synergies, numerous analysts have published and
commented around accretion, and we spoke to significant
accretion, and certainly as you follow those analysts
comments and look at numbers, you see accretion on both a
GAAP and a cash basis of over 30% on an annualized basis as
you look into that first year of operations. So, we have a
very, very strong deal on the table, we bring certainty to
the table, and we bring our experience in combining
companies. Tyson primarily has grown from acquisition. We
bring the experience of combining companies, in our view, to
the synergy from Tyson's strong operations base into this
deal.
With all that being said, we will now open up for questions.
Coordinator Thank you, sir. Our first question comes from John McMillan
of Prudential Securities.
J. Tyson Good morning, John.
J. Cantor Good morning. John, it's actually Jeff Cantor. I think
John will hop on in a second.
Quick question for you, you've had John meet fresh meat
businesses before and they didn't work out all that well.
Now, you are buying the biggest fresh meat company and you
suggest that this is a once in a lifetime opportunity.
Obviously, Dick Bond and Bob Peterson will be a big part of
this new entity, but what assurances can you give us that
they are actually going to stick around, because they will
be a big part of the success of this acquisition?
<PAGE>
J. Tyson I think, and you used the word fail, Jeff, and so I will
disagree with that. When you look back on the fresh meat
business, we did not have fresh beef. We only had fresh
pork. When you look at the separation of the two, in our
beef side, we were basically the leader with our Quick To
Fix brand in chicken fried steaks, and center of the plate
type items. We knew how to sell them.
As for our fresh pork business, we were starting to learn
about how to sell pork. And if you go back, you will see
that Tyson Foods was the first person to introduce case-
ready pork. So, we were the leader in trying to develop
those things.
In 1993 and 1994, we looked around and said you have to have
scale and you have to have size to compete in these
businesses. I now know what it might feel like if you are a
smaller poultry player competing against Tyson Foods' size
and scale. It gives you things to do when you go to the
marketplace so that you can service 100% of a customer's
needs.
So, in the past, not having that scale, we were not able to
take advantage of the strength of Tyson Foods and being able
to supply to our customers what they have come to expect
from us, which is to service all of their needs, not part of
their needs. So, we exited those businesses and we worked
hard on building our poultry businesses. You've seen the
progress we have made in the last year in our poultry
business. And along come the great folks at IBP, who
historically have recognized the unique opportunity. If you
can put the leading poultry guy together with the leading
beef and pork person, and then take the strengths of the
individual companies, marry them together and go to the
marketplace with the opportunity to meet a customer's 100%
needs. So, when I look at that from that point of view,
that is where the confidence comes from.
Secondly, when you look at the progress that Dick and Bob
and his management team have made, and moving from being
basically a fresh meats company into doing case-ready meats,
they are the leader in getting started that, especially with
their Thomas E. Wilson brand. Then, look at the products
and the brands they have accumulated over in their food
brands division, they have a range of them, from Russer to
Wilson to Fred's to Cohan's to Barney's to Dedoscasil,
they've got a wide range of brands over there, that with our
expertise in food service, when you put them together with
their depth of management and our depth of management, you
can just accelerate the base and the foundation that Dick
and Bob have put together. When you talk to Dick and Bob,
they get excited about it and their management team gets
excited about the opportunity of these two companies to come
together.
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We've always told ourselves that if a unique opportunity
came along to put ourselves in the position to be number one
in the whole protein sector, we would look at it. This
opportunity has come today for us to look at.
As to your question about Dick and Bob, they are as enthused
about this opportunity and they want to see their vision.
I'll hurry along to say, Tyson Foods and IBP have had on and
off conversations for the last two, three, four years, and
so they have the same vision from their viewpoint. They are
just enthused about how does it work, how do we grow our
business, and then how do we take the strengths and leverage
them together and then build off this base of business.
I will give you an example from the poultry side. When we
have fresh chicken in a grocery store matched up with our
frozen food items in that same grocery store, we get about a
25-30% increase in unit sales of those products. So, you
can see where Dick and Bob are headed. They get case-
ready, branded Thomas E. Wilson beef and pork out there in
the stores, and then from there they come right behind with
the linkage to the next generation of products to build off
of that. So, you can see they are headed right down the
road and right down the path we were eight or ten years
ago.
J. McMillan John, this is John McMillan. You just have a verbal
assurance that Dick and Bob are going to stay, is that
correct?
J. Cantor He means, was there a contractual agreement?
J. McMillan It's too early for a contract, you just have their verbal
assurance?
J. Tyson Guys, I know Dick Bond and I know Bob Peterson. I have
enough confidence that those guys are going to help us drive
this vision.
J. McMillan Okay. On terms of the earnings accretions, Steve, the 30%
earnings accretion, are you using the assumptions that were
in the various documents filed by IBP, or are you using your
own assumptions?
S. Hankins We are using our own assumptions. We certainly started from
the base of theirs, but our conversations and studies have
led us to our own assumptions.
J. McMillan Which are closer to management's numbers, and not the DLJ
Group make-believe numbers? Which ones are you using of
those two?
S. Hankins We started there from a base and developed our own, and
that's all I am really prepared to go into right now.
<PAGE>
J. McMillan Okay, thanks a lot.
Coordinator Thank you, our next question comes from John Bierbusse of
A.G. Edwards.
J. Tyson Good morning, John.
J. Bierbusse Good morning. They even got my name pronounced right, so
it's a record day here.
In this year of so many buyouts in the food industry,
hearing talk about synergies and cost savings has become
fairly routine. My concern is, or question rather, is
wondering how you can ensure that these cost savings can
really be retained and reported for the benefit of
shareholders over the long haul and not be competed or
eroded away in the marketplace?
S. Hankins Well, John, this is Steve, let me speak to that in a couple
of ways. First of all, it is important to note our deal
works without any synergies. Our synergies conversations we
have had to date are based upon discussions we have had with
management and our history with doing synergies with
companies. Of course, in the latest acquisition of Hudson
Foods, we were very careful in engaging those synergies.
You can go back through numerous past acquisitions where we
have been involved in the identification of synergies. So,
our view of synergies is a very reasoned and very thought
out view. It is not a simplistic take of some percentage of
sales and say it must be there somewhere in all the obvious
spaces.
We have looked at this pretty hard and we know what is there
today, and we certainly expect as we get even more under the
covers and work with their management, that there could well
be more there.
J. Bierbusse My question doesn't really center on the identification of
cost savings at the get-go, at the here and now. It is more
to the point of wondering several quarters down the road or
a year down the road, to be convinced that these cost
savings will really flow through your financials for the
benefit of shareholders. I don't mean to pick on you. I
think that is something that would be true of many other
food company acquisitions.
J. Tyson John, John Tyson here. I think the way that you'll see that
question is the way we have managed our business the last
two years, which is excess cash goes toward debt reductions.
That is the way you will be able to see it flow through.
That is where you will see it go.
<PAGE>
I think, as Steve stated before, our models have been run on
a no-synergy opportunity. Unlike some other folks who are
out there who plug the number in to make their numbers look
good for Wall Street, we know where our numbers are. We
have confidence in our numbers. Any and all synergies are
actually a bonus to us. We are going to use the synergies
to pay down debt to get our balance sheet back to a point
where you guys say to us, "Well now what are you going to do
with your excess cash?"
So, first thing we will do with the excess cash in the
synergy forms or in increased earnings will be to pay down
debt and from there we will take on the next question of
what are you going to do with the excess cash.
J. Bierbusse Okay. Thank you very much.
Coordinator Thank you. Our next question comes from Christine McCracken
of Midwest Research.
C. McCracken Good morning.
J. Tyson Good morning, Christine.
C. McCracken I was wondering if you could speak to, one of the large
shareholders has spoken out in favor of the deal. Have you
had the opportunity, at this point, to speak with any of the
other larger shareholders and could you give us any
indication as to what the outlook is there?
S. Hankins Christine, this is Steve. We have taken numerous calls from
shareholders of IBP and the response we have gotten has been
overwhelmingly favorable.
J. Tyson Christine, John here. I think it's interesting when you
look at it. As the deal is structured today, people are
going to wind up basically with one share of Tyson stock and
they are going to have cash in their pocket, which is not a
bad deal here at Christmastime. You will own part of a
great company and you got a little spending money for next
year.
S. Hankins The certainty our deal offers is thing one that has been
referenced in the majority of those conversations. The cash
component, the speed on which we are going to be able to
close, and then people move very quickly on to just the
obvious possibilities of having the largest chicken, beef,
and pork company.
C. McCracken Okay. You have pointed out, obviously, that this deal at
this level is quite accretive. Let's say that one of the
other bidders raises their bid, what is your capacity to go
higher from here?
<PAGE>
S. Hankins Well, Christine, as we look at our bid today, we are very
pleased with our position. We have a very strong bid on the
table. We have got the advantages of certainty. I guess we
will face the future when the future comes, but today, we
are very content with our position.
J. Tyson And Christine, when you look at the strength of our bid
versus the other two bids that are out there, not only is
our bid better, but when you go to certainty of closure, we
believe we can close in 30 to 45 days. It let's all of us
get on to our business. It let's us to start to take
advantage of the opportunities. When you look at one of the
other bids, it is probably going to be 9 to 12 months to
close. And then, in fact for them to close, they have got
to dismantle the company they are trying to put together.
So, we have got, I believe, the upper hand.
C. McCracken Okay, and then one final question. Obviously, there have
been some concerns regarding concentration in agriculture
raised by some of the industry people, i.e. policy makers.
I am wondering is there anything real there? Have you done
anything or taken any steps to alleviate or allay any of
these concerns?
J. Tyson When you look at the Tyson/IBP combination, it would still
leave two people out in Iowa buying hogs, versus a
Smithfield/IBP combination would just leave one buyer of
hogs out there in the Midwest. We have expressed those
ideals in Washington.
When you run the indexes, the indexes, based on all the
technical models, say that our deal is okay and has no
regulatory issues. So, we are comfortable, and we get that
advice in a deal this size from three or four different
points of discussion on it. So, we are comfortable that the
ideal of starting the tender offer would get the regulatory
process started, would get this underbrush cleared out of
the way so we can get on to the point of putting two great
companies together and two great management teams together.
Then, we can take advantage of the opportunities that we
see, and the opportunities that the management team and IBP
sees together, and get on about the business of selling more
pork and selling more beef, and taking products and putting
them in convenience forms for the customers, starting the
next generation of fully cooked items in the beef industry
and the pork industry.
We are all about how to sell more protein together of beef,
pork and chicken to the customers in the forms that the
customers are coming to expect, which is highly quality food
in a convenience form so they can spend more time with their
families.
C. McCracken Thank you.
<PAGE>
Coordinator Our next question comes from Jane Merring of Salomon Smith
Barney.
J. Merring Good morning. First of all, maybe I missed something, I was
on an airplane to Australia, but Smithfield is still engaged
in a due diligence process and as far as I know they haven't
gone away. Is that correct?
J. Tyson That would seem to be the case. Yes.
J. Merring So sort of technicality, but you're engaging in this tender
offer. Why would a shareholder tender now if they think
that there's a possibility that let's say Smithfield were to
change its bid or raise its offer while there's still a
sense that there's a competition alive. I'm not quite sure,
it's a little strange to me that you'd be doing a tender
now. Does this tender go away if people don't tender now or
what are you saying?
S. Hankins The reason we're doing the tender now is that we're far
enough along in due diligence and that our vision of this
combination is to be in a position to do this. Our tender
brings certainty to the table. We think that's what the
shareholders are looking for.
J. Merring I understand. But let's say there's a counter party out
there who decides to raise their bid or change their terms
of the bid, meaning that suddenly your offer is not
"superior," what happens to the tender?
J. Tyson Well that would be up to the option of the shareholder at
that time. They could either leave their tender with us or
they could pull down their tender and look at the other
deal. I think it comes back to we can move with certainty,
we can move with closure. The IB shareholders can get their
cash in their hand, they can start to do something with that
cash. They're going to wind up with one share of Tyson
stock.
J. Merring I understand the terms. So it's revocable for the
shareholder?
J. Tyson Yes. And when you read the tender offer it's subject to the
IB Board of Directors coming through on the final closure of
the situation. So, our deal's all about putting two great
companies together, growing the business and it's not about
dismantling companies.
J. Merring No, I'm not questioning that. I was asking technically.
Secondly, I was confused between, you talked at one point
about 15-30 days you can complete the process and then in
answer to the last question you were talking about certainty
of closure 30-40 days. What are those two different time
periods?
<PAGE>
S. Hankins The 15-30 days would be the timeframe to complete the
regulatory.
J. Tyson First 15-30 days is the regulatory proceedings in
Washington, to go through the Hart Scott period.
J. Merring Well let me just interrupt you there. I cover the package
food stocks, I cover General Mills. They're trying to close
a deal with Pillsbury where there aren't really any
noticeable, there are some overlaps, but they've just said
their deal was pushed out 6-10 weeks because common wisdom
that "nothing happens in DC through the end of this year."
I mean, 15-30 days is an outstanding pace.
J. Tyson It is, but let's give you kind of the technical walkthrough.
So we've got somebody here that understands the technical
mechanism will walk you through it.
L. Baledge This is Les Baledge. I'm the General Counsel for Tyson
Foods. You are correct in that the typical time period for
a Harts-Scott Rodino review is a 30 day time period;
however, there is a special rule for tender offers which
triggers a 15 day requirement on behalf of the Justice
Department or the FTC, depending upon the reviewing agency
to respond. And as John has indicated, we believe this
simply doesn't effect the Herfendahl or other indexes and we
are expecting a prompt, positive result.
J. Merring Okay, so what you're saying is that when you do a tender, it
obligates Justice to make some sort or ruling in 15 days.
They could either say nothing and let it go or they could
ask for more information?
L. Baledge That's correct.
S. Hankins So Jane, do you see, the regulatory portion of this and the
cash tender portion of this very tightly overlaps.
J. Merring Okay. But basically if the states, and I understand what
you're saying on the Herfendahl's and the models, but this
can get fairly politicized if the states were to jump up and
down here and demand that Justice take a closer look. You
would just have to hear that they're taking a closer look in
15 days?
J. Tyson That's a possibility. But based on our conversations we've
had around in Washington, based on explaining it to our
viewpoint up there which is nothing really changes in a
Tyson/IBP combination. You're still going to have IBP out
there buying cattle, you're still going to have IBP out
there buying their animals from the independent producer out
there in the world, whereas maybe a possible other
combination requires dismantling.
<PAGE>
J. Merring Well I don't think selling to pork plants is dismantling. I
mean, I'm not defending one deal or the other, but I think
it's sort of an extreme statement. But nonetheless, the
point I'm getting at is that we can sit here and say there's
no direct overlap in pork, there's still two buyers for hogs
in Iowa, but you can't be so naive to think that this isn't
going to be a point of political grandstanding for a lot of
state and local regulators and senators. So have you had
conversations with Wellstone, with Glickman, with all these
people who like to jump up and down about these things that
you really think in 15 days you're going to have approval or
lack of request for further information?
J. Tyson Well, we've given you our answer and we've tried to point
you in a direction where we've had our conversations, we've
tried to give you the assurances based on our dialogue that
we've had with people both at a state level and at a
Washington level and the indications of where we are. I
don't know what other answer you would like from us at this
point.
J. Merring It's just a little contrary to some of the public statements
that they've made. I guess lastly my question is, your
assertion about synergies, especially top line, Con Agra, as
you know, has beef, pork, chicken, turkey under one roof.
It hasn't really been clear to the Street that they get a
lot of overlap or benefits from being in all three
businesses. How is your model going to be different?
J. Tyson Well I'd state that very simply. I wouldn't trade our
chicken business for any other chicken business out there
and I would not trade IBP's beef or pork business for any
other pork business out there. So I think that the key
differentiator here is that you are dealing with the
strongest players in those arenas that bring the most to the
consumer and the marketplace and run the best companies.
J. Merring So it's a question of management is what you're saying and
being number one, that's really going to make the
difference?
S. Hankins Well, you have what you have. And as I say, I wouldn't
trade the chicken component, the beef component or the pork
component for any other one out there, nor the management
teams.
G. Lee This is Greg Lee. I think from our perspective, we have the
number one branded chicken and IBP has set down the road to
establish themselves as the number one in case ready,
prepared products for the retail/supermarket industry, the
fresh meat case both in fresh products and fully prepared.
We think there's great synergies there and we think you're
going to have the two strongest players. There's no one
else that's really doing that in scale. We believe that we
can do it.
<PAGE>
I might also add that your comments with regard to the
concentration in pork industry and the question as to
whether Smithfield might have to liquidate some plants, that
represents anywhere from a third to 50% of their pork
capacity. I would think that's a fairly substantial issue.
J. Merring Fifty percent of their own, not combined?
G. Lee We're talking about IBP.
J. Merring Okay, thank you so much.
Coordinator Our next question comes from Nick Siano of Bear Stearns.
N. Siano I just wanted to note, is this $26 offer subject to
completion of your due diligence? Or is this solid and any
further due diligence will not affect the offer price?
J. Tyson We'll continue to keep doing due diligence. I mean, that's
just the responsibility of good management teams.
N. Siano I realize that, but is the tender offer itself, is the price
of the tender offer or the tender offer itself subject to
completion of due diligence?
J. Tyson Not a condition.
N. Siano When do you anticipate filing the Hart-Scott Rodino filing?
J. Tyson Today probably before business close. And if we don't get
it finished today, it will be first thing in the morning.
Paperwork's underway.
N. Siano Thank you very much.
Coordinator Our next question comes from Larry Luciavner of UBS Warburg.
L. Luciavner Just a question, just to get back to the 30% accretion. Is
that based on 2000 numbers, 2001 numbers? What is that
actually based on?
S. Hankins It's based on 2001 estimates.
L. Luciavner Thank you.
Coordinator Our next question comes from John McMillan, Prudential
Securities.
J. Cantor It's Jeff Cantor again. Any willingness by management to
widen the collar with your stock trading below $12.00?
J. Tyson We don't know where the stock is today. I think we've only
got into the process for a week and we'll just see how the
situation plays out. But based on today, we have the best
deal on the table.
<PAGE>
J. Cantor Thank you.
Coordinator Our next question comes from Alex Shulgner of Seneca.
A. Shulgner Just wanted to understand when you expect to hear from
Special Committee at IBP and what the next steps are in that
regard.
J. Tyson Before we mailed out our tender offer, I called the
chairperson of the Special Committee and visited with them
and told them that this letter was coming to their direction
and we would start this process trying to clear out the
underbrush so we can get certainty and we can get closure,
both for the benefit of Tyson Foods and both for the benefit
of the IBP shareholders and the management team. I would
assume that the Special Committee in their wisdom and their
judgment are having conversations as we speak and would look
forward for their call back to us. But we talk with the
Special Committee on an as need basis and we called them
last night and shared with them what we were going to be
doing this morning, and then sent them a copy of the press
release and the tender offer and they have that in their
hand.
A. Shulgner And when you say "clear out underbrush," you were referring
to the regulatory issues there? Or is there anything else
that you're thinking of that starting this process does?
J. Tyson Primarily the regulatory issues, so we can start to get
those issues clarified.
A. Shulgner Thank you.
Coordinator Our next question comes from Terrell Armstrong of Ohio
Teachers Association.
T. Armstrong Your press releases have stated that this deal is not
intended upon financing; however, when I kind of look at the
numbers using your existing line of credit of about a
billion with $260 million of CP outstanding, that leaves you
about $740 million of available funds. Where is the balance
going to come from for the cash portion of your tender?
S. Hankins Certainly we're working with our banks with those
arrangements, so we will rework our credit situation and not
have an issue there.
T. Armstrong So you're increasing the size of those lines. Is that what
I take away from that?
S. Hankins That would be correct.
T. Armstrong When is that expected to be completed?
S. Hankins Well, our offer is not contingent on financing, so we're
ready to go on an as needed basis.
<PAGE>
T. Armstrong So they would grant you the increase in the size of the
line?
S. Hankins That would be correct, yes.
T. Armstrong Next question, in your total debt number it seems like
there's about $110 million of institutional notes. Are any
of those notes dependent upon Tyson remaining single A
rated?
S. Hankins No.
T. Armstrong Could you talk a little bit about how you plan to fund the
IBP's cap ex, which I think their plans before were to spend
about $2 billion over the next five years. Is that going to
remain in place and how is that going to be funded?
S. Hankins The cap ex will be funded primarily from cash flows. And as
to the IBP plan, I think you're referring to the plan in the
management estimate and the proxy as to capital spending.
Certainly, as we get more involved with them, we will
further define our view to the capital spending plans.
T. Armstrong Thank you.
Coordinator Our next question comes from Scott Houlihan of OTA Ltd.
S. Houlihan I had a question. If you guys are commencing a tender, am I
to take it you're having a difficult time getting a friendly
agreement, because people who are using doing a friendly
agreement don't commence tenders?
J. Tyson No, we're having great conversations with the Special
Committee and with the management team. The singular purpose
of the tender offer, as was allowed under the
Confidentiality Agreement, we have the same confidentiality
agreement as the folks at Smithfield, allows this process to
start this way. The reason we chose to start it was to
start the regulatory clock ticking so we can get on about
our business and IBP can get on about their business of
putting these two great companies together and we can start
to take uncertainty out of the marketplace, we can start to
take uncertainty out of the IBP management team. Because
everybody knows that when your company's for sale, it just
leaves uncertainty. Part of the challenge that IBP has is
deciding on how to run their business. So what we're trying
to work with is to get these questions answered in an
efficient way and in a timely way. And I think what this
shows is how Tyson Foods would run the business - make
decisions, act quickly, act promptly and get on about
running our business. That's just a function of starting
the regulatory clock.
S. Houlihan When did you guys think you could get a definitive agreement
signed?
<PAGE>
J. Tyson It really depends on the other side, but I would believe
that if we get the regulatory clock cleaned here in the next
30 days, and it's just a matter of us setting down and
working through the paperwork between the lawyers on both
sides and reasonable people can work efficiently and get it
done. But I think fundamentally we're ready to go.
Coordinator Our last question comes from Alex Shulgner of Seneca.
A. Shulgner I just wanted to know how many shares of IBP, Tyson and
affiliates currently own?
J. Tyson Less than $15 million.
Coordinator Our next question comes from Mulni Chowdry of UCSG.
M. Chowdry My question is, when does this cash tender offer become
unconditional?
J. Tyson The lawyer's shaking his head here. On the expiration date.
M. Chowdry When does it become unconditional, on the expiration date?
J. Tyson On the expiration date.
M. Chowdry Is it conditional under HSR?
J. Tyson Yes.
M. Chowdry If 80% tenders, how much are you going to pay cash? You
will pay maximum of 50.1%.
J. Tyson It will be a prorated formula.
M. Chowdry And the rest of the people will get shares?
J. Tyson Correct.
M. Chowdry And the collar you have on the share portion, is there any
averaging? That $12.40 or $15.60 that you compute, is that
based on average price of Tyson or its spot price?
J. Tyson It is based on the average of the 15-days closing price
determined 5 days prior to the closing of the transaction.
M. Chowdry That would be the closing of the total transaction?
J. Tyson Of the stock portion.
M. Chowdry Okay. Thank you.
<PAGE>
J. Tyson Well I'd like to say thank you to everybody that's on the
conference call and just tell you that we're excited about
the uniqueness of Tyson Foods and IBP, the combination of
the leaders in beef, pork and chicken getting together to
service our customers in the retail sector and the club
store sector and the food service sector. It's all about
selling more beef, selling more pork, selling more chicken,
and building to great businesses and servicing the customer
in the future. With that we'll wish everybody a happy
holiday period and good day.
More detailed information pertaining to Tyson's proposal will be set forth
in appropriate filings to be made with the SEC, if and when made.
Shareholders are urged to read any relevant documents that may be filed
with the SEC because they will contain important information. Shareholders
will be able to obtain a free copy of any filings containing information
about Tyson and IBP, without charge, at the SEC's Internet site
(http://www.sec.gov). Copies of any filings containing information about
Tyson can also be obtained, without charge, by directing a request to Tyson
Foods, Inc., 2210 West Oaklawn Drive, Springdale, Arkansas 72762-6999,
Attention: Office of the Corporate Secretary (501) 290-4000.
Tyson 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 Tyson. A
detailed list of the names of Tyson's directors and officers is contained
in Tyson's proxy statement for its 2000 annual meeting, which may be
obtained without charge at the SEC's Internet site (http://www.sec.gov) or
by directing a request to Tyson at the address provided above.
As of the date of this communication, none of the foregoing participants,
individually beneficially owns in excess of 5% of IBP's common stock.
Except as disclosed above and in Tyson's proxy statement for its 2000
annual meeting and other documents filed with the SEC, to the knowledge of
Tyson, none of the directors or executive officers of Tyson has any
material interest, direct or indirect, by security holdings or otherwise,
in Tyson or IBP.
This communication is not an offer to purchase shares of IBP, nor is it an
offer to sell shares of Tyson Class A common stock which may be issued in
any proposed merger with IBP. Any issuance of Tyson Class A common stock
in any proposed merger with IBP would have to be registered under the
Securities Act of 1933, as amended, and such Tyson stock would be offered
only by means of a prospectus complying with the Act.
