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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 13, 2000
FOR IMMEDIATE RELEASE
PROPOSED SMITHFIELD FOODS STOCK FOR STOCK ACQUISITION OF IBP "WILL CREATE
A STRONG AND COMMITTED PARTNER FOR FARMING COMMUNITIES," SAYS SMITHFIELD
FOODS CEO JOE LUTER
SMITHFIELD, VIRGINIA, NOVEMBER 13, 2000 - Earlier today Smithfield Foods, Inc.
(NYSE: SFD) announced a proposal to acquire IBP, Inc. (NYSE: IBP) through a
strategic stock for stock combination of the two companies.
Smithfield Foods' proposal followed the announcement on October 2, 2000 that
IBP's senior management and a select group of insiders and Wall Street investors
planned to take IBP private by acquiring the company in a 1980s-style leveraged
buyout. That transaction, if completed, would burden the company with hundreds
of millions of dollars of junk bonds and total debt obligations of $2.9 billion.
This debt would leave the company more vulnerable to an economic downturn. The
proposed leveraged buyout is also a purely financial transaction that provides
no corresponding strategic or operating benefits.
Joseph W. Luter, III, Smithfield Foods' Chairman and Chief Executive Officer,
today made the following comments about his company's proposal and why he
believes it represents a better deal for farming communities than the proposed
leveraged buyout:
"We believe the transaction we are proposing is a great opportunity for the
shareholders of both Smithfield Foods and IBP. We believe it's the right
strategic course to take in order to be responsive to the demands of the
consolidating food retail and global food service industries. And we believe it
is a good deal that will create a strong and committed partner for farming
communities.
"The combined company would have a national brand, the opportunity to expand its
presence in the fast-growing markets for case-ready and value added meat
products, and state-of-the-art systems for meeting our customers' increasingly
stringent specifications for product quality, consistency and uniformity. It
would also have far greater financial resources and staying power than a
highly-leveraged company controlled by financial investors with little long-term
commitment to our industry or way of life.
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"Smithfield Foods has a long history of working in productive partnership with
independent farmers. Today we provide over 1700 contract farmers with credit,
access to state-of-the-art technology, and fixed price contracts that pay a full
and fair price for their products while shielding them from volatility and other
market risks. I take great pride in the fact that in the last decade, not one of
our contract farmers has defaulted. On the contrary, nearly all have grown and
prospered. We are committed to building on that record to the benefit of all
concerned.
"At the same time, we are sensitive to the concerns some folks may have about a
combined company and want to do what we can to put those concerns to rest. As we
have said in our proposal to IBP, we are sensitive to potential issues of market
concentration and have a plan in place to address such issues should they arise,
which may involve the sale of certain assets. I can also say up front that we
have no intention of vertically integrating the cattle growing operation. We
aren't going to go into the feedlot business. And we do not expect to increase
our vertical integration in the hog business.
"We have great respect for the people of IBP. The company is a low-cost,
high-quality beef and pork processor. Where we differ is on how best to create
value for shareholders and where to draw the line between the risks a company is
willing to take upon itself and the risks it is willing to place upon the
communities it's meant to serve.
"We hope that IBP's board will conclude that our offer is indeed superior for
all concerned and begin working with us towards a definitive merger agreement.
In the meantime, we will continue focusing on serving our customers and building
Smithfield Foods for the future."
Smithfield Foods was ranked the number one FORTUNE 500 food stock in total
return to investors, and placed in the top 15th percentile in total return to
investors among all FORTUNE 500 companies, over the past 10 years. 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
THIS NEWS RELEASE 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
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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.
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.
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