SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
(Amendment No. 1)
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
|X| Preliminary Information Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
|_| Definitive Information Statement
TYSON FOODS, INC.
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(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required
|X| Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $0.05 per share, of IBP, inc. ("IBP Shares")
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(2) Aggregate number of securities to which transaction applies:
56,570,988 IBP Shares/1/
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $25.00 per IBP Shares
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(4) Proposed maximum aggregate value of transaction:
$1,414,274,700/2/
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(5) Total fee paid:
$282,854.94/3/
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|X| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $315,995.61
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(2) Form, Schedule or Registration Statement No.: Schedule 14C
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(3) Filing Party: Tyson Foods, Inc.
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(4) Date Filed: January 10, 2001
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/1/ Based upon the sum of (i) 53,965,955 IBP Shares, which represents one-half
of the total number of IBP Shares outstanding minus one IBP Share and (ii)
2,605,033 options to acquire IBP Shares, in each case outstanding as of the
close of business on August 3, 2001. This represents the number of IBP
Shares to which the actions contemplated by this Information Statement
applies. The remaining IBP Shares are being purchased pursuant to a cash
tender offer by the Registrant.
/2/ Estimated for purposes of calculating the amount of the filing fee pursuant
to Rules 0-11(d) and 0-11(a)(4) under the Securities Exchange Act of 1934,
based on the product of (i) $25.00, the average of the high and low sales
price of IBP Shares on the New York Stock Exchange on August 6, 2001 and
(ii) 56,570,988 IBP Shares, the number of IBP Shares outstanding at the
close of business on August 2, 2001, to which this transaction applies
assuming the exercise of all options to purchase IBP Shares expected to be
outstanding and exercisable prior to the date the transaction is to be
effected.
/3/ Calculated as 1/50 of 1% of the transaction value.
TYSON FOODS, INC.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
INFORMATION STATEMENT
August ____, 2001
Dear Tyson Stockholder:
This Information Statement is furnished by the board of directors (the
"Board of Directors") of Tyson Foods, Inc. ("Tyson") to holders of the
outstanding shares of (i) Tyson Class A common stock, par value $0.10 per share
(the "Tyson Class A Common Stock"), and (ii) Tyson Class B common stock, par
value $0.10 per share (the "Tyson Class B Common Stock," and together with the
Tyson Class A Common Stock, the "Tyson Common Stock") in connection with an
Agreement and Plan of Merger, dated as of January 1, 2001, among Tyson, Lasso
Acquisition Corporation ("Purchaser"), a wholly owned subsidiary of Tyson, and
IBP, inc. ("IBP"), as modified by the Stipulation and Order dated June 27, 2001
(the "Stipulation") (as so modified (except where the context indicates
otherwise) the "Merger Agreement"), pursuant to which Tyson has agreed to
acquire IBP upon the terms and subject to the conditions set forth in the Merger
Agreement. Among other things, the Merger Agreement provides for Tyson, through
Purchaser, to purchase up to 50.1% of the issued and outstanding common stock,
par value $0.05 per share, of IBP (the "IBP Shares") for $30.00 per IBP Share in
cash (the "Offer"). We commenced the Offer on July 3, 2001. The Offer expired at
12:00 Midnight on August 3, 2001. On August 4, 2001, Tyson announced that it had
accepted the IBP Shares tendered in the Offer. Finally, the Merger Agreement
provides for IBP to merge into Purchaser, at which time each remaining IBP Share
will be converted into the right to receive Tyson Class A Common Stock valued at
$30.00 per IBP share, subject to adjustment (the "Merger"). The closing price of
shares of Tyson Class A Common Stock was $______ on ______, 2001, the last full
trading day before the date of this Information Statement. If that were the
average per share price of Tyson Class A Common Stock during the
fifteen-trading-day period ending on the fifth trading day before the effective
time of the Merger, IBP stockholders would receive ____ shares of Tyson Class A
Common Stock with a market value of $_______ based on the average price in
exchange for each IBP Share.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
The attached Information Statement describes the Offer, the Merger, and
the Merger Agreement. We urge you to read these materials carefully.
This Information Statement is being provided to inform you that the
holders of shares of Tyson Common Stock representing approximately 90% of the
voting power of Tyson Common Stock have delivered to Tyson a written consent
approving the issuance of Tyson Class A Common Stock pursuant to the Merger and
the transactions contemplated by the Merger Agreement. Under the rules of the
New York Stock Exchange, the issuance of Tyson Class A Common Stock requires
stockholder approval prior to such issuance. Approval of the issuance of Tyson
Class A Common Stock will become effective on [August ___], 2001.
By Order of the Board of Directors
R. READ HUDSON
Secretary
TABLE OF CONTENTS
Page
----
SUMMARY TERM SHEET ............................................................. 1
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION .................... 4
THE TRANSACTION ................................................................ 4
Overview .................................................................... 4
The Companies ............................................................... 5
Shares to be Issued--Tyson Class A Common Stock ............................. 6
Purpose of the Issuance ..................................................... 7
Plans for IBP ............................................................... 7
Consequence of Share Issuance ............................................... 7
Fairness Opinions ........................................................... 7
Background .................................................................. 11
Regulatory Requirements ..................................................... 15
Material Federal Income Tax Consequences .................................... 16
Accounting Treatment ........................................................ 16
Appraisal Rights ............................................................ 16
FINANCIAL INFORMATION .......................................................... 16
Selected Financial Data for Tyson ........................................... 16
Selected Financial Data for IBP ............................................. 18
Certain Comparative and Pro Forma Financial Information ..................... 19
THE MERGER AGREEMENT, STIPULATION AND VOTING AGREEMENT ......................... 28
The Merger Agreement ........................................................ 28
Employee Stock Options ................................................ 29
Representations and Warranties ........................................ 30
Covenants of IBP....................................................... 30
Covenants of Tyson .................................................... 31
Mutual Covenants of Tyson and IBP ..................................... 31
Conditions to the Merger .............................................. 32
Termination ........................................................... 33
Fees and Expenses ..................................................... 34
Amendments ............................................................ 34
The Stipulation ............................................................. 35
The Offer ............................................................. 35
The Exchange Offer and the Cash Election Merger ....................... 35
IBP Representations ................................................... 35
Covenant of Tyson ..................................................... 35
Covenants of IBP ...................................................... 35
Mutual Covenants of Tyson and IBP ..................................... 36
Termination ........................................................... 36
Recommendation ........................................................ 36
Voting Agreement ............................................................ 36
CERTAIN LEGAL MATTERS .......................................................... 36
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ................. 41
Certain Beneficial Owners ................................................... 41
Tyson Common Stock Ownership of Management .................................. 42
AVAILABLE INFORMATION .......................................................... 44
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ................................ 44
Tyson ....................................................................... 44
IBP ......................................................................... 44
ANNEXES
Annex A--Fairness Opinion of Merrill Lynch, Pierce, Fenne& Smith Incorporated A-1
Annex B--Fairness Opinion of Stephens Inc. .................................. B-1
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SUMMARY TERM SHEET
THIS SUMMARY TERM SHEET HIGHLIGHTS SELECTED INFORMATION INCLUDED IN
THIS INFORMATION STATEMENT. BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL OF
THE INFORMATION THAT IS IMPORTANT TO YOU. TO MORE FULLY UNDERSTAND THE ISSUANCE
OF TYSON CLASS A COMMON STOCK PURSUANT TO THE TRANSACTION (AS DEFINED HEREIN)
AND THE MERGER AGREEMENT (AS DEFINED HEREIN), AND FOR A MORE COMPLETE
DESCRIPTION OF THE LEGAL TERMS OF THE MERGER AGREEMENT, YOU SHOULD READ
CAREFULLY THIS ENTIRE DOCUMENT AND THE OTHER DOCUMENTS TO WHICH WE HAVE REFERRED
YOU.
Overview (Page __)
o Pursuant to a merger agreement with IBP, inc., or IBP, we
expect to complete a two-step transaction in which we will
acquire 100% of IBP. In the first step of the transaction, we
will purchase up to 50.1% of the IBP shares for $30.00 per IBP
share in cash pursuant to a tender offer. The tender offer
expired at 12:00 Midnight on August 3, 2001. On August 4,
2001, we announced that we had accepted the IBP shares
tendered in the tender offer. In the second step of the
transaction, we intend to cause IBP to merge into Lasso
Acquisition Corporation, or Purchaser, at which time each
remaining IBP share will be converted into the right to
receive Tyson Class A common stock valued at $30.00 per IBP
share, subject to adjustment.
o The closing price of shares of Tyson Class A common stock was
$______ on ______, 2001, the last full trading day before the
date of this Information Statement. If that were the average
per share price of Tyson Class A common stock during the
fifteen-trading-day period ending on the fifth trading day
before the effective time of the merger, IBP stockholders
would receive ____ shares of Tyson Class A common stock with a
market value of $_______ based on the average price in
exchange for each IBP share.
The Companies (Page __)
o Tyson produces, distributes and markets chicken Mexican foods,
prepared foods, animal and pet food ingredients and live
swine.
o Purchaser is our wholly owned subsidiary and ha not yet
engaged in any business activities, other than those incident
to its formation and the transactions contemplated by the
merger agreement.
o IBP is one of the world's largest manufacturers of fresh meats
and frozen and refrigerated food products, with 2000 annual
sales in excess of $16.9 billion.
Shares to be Issued--Tyson Class A Common Stock (Page __)
o We expect that up to [__________] shares of Tyson
Class A common stock will be issued in connection with the
merger and upon the exercise of IBP options that will become
Tyson options pursuant to the merger.
o The shares of Tyson Class A common stock to be issued to
acquire IBP will have the same relative rights, preferences
and limitations as shares of Tyson Class A common stock
presently held by you.
Purpose of the Issuance (Page __)
o The issuance of Tyson Class A common stock will facilitate the
two-step transaction in which Tyson will acquire IBP.
Plans for IBP (Page __)
o The acquisition of IBP will allow us to expand our business to
include the processing and marketing of beef and pork
products.
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Consequence of Share Issuance (Page __)
o After the additional shares of Tyson Class A common stock are
issued pursuant to the merger, there will be more shares of
Tyson Class A common stock outstanding and therefore, you will
have a proportionally smaller percentage of the total
ownership and voting power in our company.
Background (Page __)
o We first publicly announced our interest to acquire IBP on
December 4, 2000. We and a special committee of IBP's board of
directors continued to negotiate the terms of the acquisition
through the month of December. The merger agreement was signed
on January 1, 2001. On March 29, 2001, we announced that we
had terminated the merger agreement on various grounds,
including our belief that we had been inappropriately induced
into signing the merger agreement and our belief that IBP had
breached numerous representations and warranties made to us in
the merger agreement. After a trial in the Delaware Chancery
Court, the court ruled on June 15, 2001 that we had not been
inappropriately induced into signing the merger agreement and
that we had improperly terminated the merger agreement, and
IBP's claim for specific performance was granted. Thereafter,
on June 27, 2001, Tyson, Purchaser and IBP agreed to the
Stipulation and Order dated June 27, 2001, which modified the
merger agreement to provide for the tender offer and the
merger. On July 3, 2001, Tyson and Purchaser commenced the
tender offer to purchase up to a number of IBP shares which,
together with the IBP shares already owned by Tyson, would
represent 50.1% of the outstanding IBP shares for $30.00 per
IBP share. The tender offer expired at Midnight (New York City
time) on August 3, 2001. On August 4, 2001, Tyson announced
that it had accepted the IBP shares tendered in the tender
offer.
o The stipulation and order also provided for the elimination of
an exchange offer, pursuant to which Tyson would have
exchanged Tyson Class A common stock valued at $30.00 per
share, subject to adjustment, for all remaining IBP shares not
purchased for cash in a tender offer, that had originally been
required by the merger agreement.
o For a more detailed description of the events leading to the
signing of the merger agreement, see the section entitled "The
Transaction - Background."
Financial Information (Page __)
o The Securities and Exchange Commission, or SEC, allows the
"incorporation by reference" of certain information into this
Information Statement, which means that we can disclose
important information to you by referring you to another
document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this
Information Statement, except for any information superseded
by information contained directly in this Information
Statement. This Information Statement incorporates by
reference the documents set forth in the section entitled
"Incorporation of Certain Documents by Reference," that Tyson
and IBP have previously filed with the SEC. These documents
contain important information about Tyson and IBP and their
respective financial conditions.
Fairness Opinions (Page __)
o Merrill Lynch, Pierce, Fenner & Smith Incorporated, or Merrill
Lynch, provided an opinion, dated January 1, 2001, to our
board of directors to the effect that, as of January 1, 2001,
the consideration to be paid by us in the transaction as
originally contemplated in the merger agreement, taken as a
whole, was fair to Tyson from a financial point of view. The
full text of the opinion of Merrill Lynch is set forth in
Annex A. Merrill Lynch has not updated, and we have not asked
Merrill Lynch to update, its opinion.
o Stephens Inc., or Stephens, has provided an opinion, dated
January 1, 2001, to our board of directors that, as of January
1, 2001, the consideration to be paid by us pursuant to the
merger agreement as originally executed in the aggregate, was
fair to Tyson from a financial point of view. The full text of
the fairness opinion of Stephens is set forth in Annex B.
Stephens has not updated, and we have not asked Stephens to
update, its opinion.
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Who Can Help Answer Your Questions
o If you have more questions about the issuance o additional
shares of Tyson Class A common stock, the acquisition of IBP
or would like additional copies of this Information Statement,
you should contact Tyson's Director of Investor Relations at
the following address:
Director of Investor Relations
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
(501) 290-4000
Email: tysonir@tyson.com
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Certain statements contained in this Information Statement are
"forward-looking statements," such as statements relating to future events and
financial performance and the proposed acquisition by Tyson Foods, Inc.
("Tyson") of IBP, inc. ("IBP"). These forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual results to
differ materially from historical experience or from future results expressed or
implied by such forward-looking statements. Generally, the words "will," "may,"
"should," "continue," "believes," "expects," "intends," "anticipates" or similar
expressions identify forward-looking statements. Among the factors that may
cause actual results to differ materially from those expressed in, or implied
by, the statements are the following: (i) the risk that Tyson and IBP will not
successfully integrate their combined operations; (ii) the risk that Tyson and
IBP will not realize estimated synergies; (iii) unknown costs relating to the
proposed transaction; (iv) risks associated with the availability and costs of
financing, including cost increases due to rising interest rates; (v)
fluctuations in the cost and availability of raw materials, such as feed grain
and livestock costs; (vi) the impact of weather on the supply and cost of raw
materials; (vii) changes in the availability and relative costs of labor and
contract growers; (viii) market conditions for finished products, including the
supply and pricing of alternative proteins; (ix) effectiveness of advertising
and marketing programs; (x) changes in regulations and laws, including changes
in accounting standards, environmental laws, and occupational, health and safety
laws; (xi) access to foreign markets together with foreign economic conditions,
including currency fluctuations; (xii) the effect of, or changes in, general
economic conditions; and (xiii) adverse results from on-going litigation. Tyson
undertakes no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
THE TRANSACTION
Overview
Pursuant to an Agreement and Plan of Merger dated as of January 1,
2001, among Tyson, Lasso Acquisition Corporation ("Purchaser"), and IBP, as
modified by the Stipulation and Order dated June 27, 2001 (the "Stipulation")
(as modified by the Stipulation (except where the context otherwise indicates),
the "Merger Agreement"), Tyson commenced a tender offer pursuant to which
Tyson, through Purchaser, offered to purchase up to the number of IBP shares
of common stock, par value $0.05 per share (the "IBP Shares"), that represent,
together with the IBP Shares owned by Tyson, 50.1% of the IBP Shares, at a
purchase price of $30.00 per IBP Share, net to the seller in cash, without
interest (as amended, supplemented or otherwise modified from time to time, the
"Offer").
We previously commenced a tender offer for up to 50.1% of the
outstanding IBP Shares at $30.00 per IBP Share (the "Initial Offer"). We
permitted the Initial Offer to expire on February 28, 2001. On March 29, 2001,
we announced that we had terminated the Merger Agreement on various grounds,
including our belief that we had been inappropriately induced into signing the
Merger Agreement and our belief that IBP had breached numerous representations
and warranties made to us in the Merger Agreement. After a trial in the Delaware
Chancery Court, the court ruled on June 15, 2001 that although we did not breach
the Merger Agreement or any duty to IBP's stockholders by letting the Initial
Offer expire on February 28, 2001, we had not been inappropriately induced into
signing the Merger Agreement and that we had improperly terminated the Merger
Agreement, and IBP's claim for specific performance was granted. Thereafter, on
June 27, 2001, Tyson, Purchaser and IBP agreed to the Stipulation. On July 3,
2001, Tyson commenced the Offer, offering $30.00 per IBP Share in cash, net to
seller, for a number of IBP Shares which, together with IBP Shares owned by
Tyson, represents 50.1% of the outstanding IBP Shares. The Offer expired at
12:00 Midnight on August 3, 2001. On August 4, 2001, Tyson announced that it
had accepted the IBP Shares tendered in the Offer.
Following the completion of the Offer and the satisfaction or waiver of
certain conditions in the Merger Agreement, the Merger Agreement provides that
IBP will be merged with and into Purchaser with the Purchaser continuing as the
surviving corporation (the "Merger", and together with the Offer, the
"Transaction"). At the effective time of the Merger (the "Effective Time"), each
IBP Share outstanding immediately prior to the Effective Time (other than IBP
Shares owned by Tyson, Purchaser or other subsidiaries of Tyson) would be
converted into the right to receive shares of Tyson Class A common stock, par
value $0.10 per share (the "Tyson Class A Common Stock"), having a value of
$30.00 if, during the fifteen trading day period ending on the fifth trading day
before the
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Effective Time, the average per share closing price of Tyson Class A Common
Stock is at least $12.60 and no more than $15.40. If the average per share price
of Tyson Class A Common Stock is less than $12.60, 2.381 shares of Tyson Class A
Common Stock will be exchanged for each IBP Share. If the average per share
price of Tyson Class A Common Stock is more than $15.40, 1.948 shares of Tyson
Class A Common Stock will be exchanged for each IBP Share. This $30.00 value is
subject to change if the average per share closing price of Tyson Class A Common
Stock is not in that range. The closing price of shares of Tyson Class A Common
Stock was $______ on ______, 2001, the last full trading day before the date of
this Information Statement. If that were the average per share price of Tyson
Class A Common Stock during the fifteen-trading-day period ending on the fifth
trading day before the effective time of the Merger, IBP stockholders would
receive ____ shares of Tyson Class A Common Stock with a market value of
$_______ based on the average price in exchange for each IBP Share.
On January 1, 2001, the board of directors of IBP (the "IBP Board"), by
unanimous vote, approved, upon the unanimous recommendation of the special
committee (the "Special Committee") of IBP's Board, the Merger Agreement and the
transactions contemplated by it, including the Offer and the Merger. At a
meeting held on June 26, 2001, the IBP Board, by a unanimous vote of those
present, determined that the Stipulation was in the best interests of IBP and
its shareholders and was the best means to facilitate consummation of the
transactions contemplated by the Merger Agreement, as modified by the
Stipulation. All of the IBP Board members were present for the vote, except for
Martin A. Massengale, who expressed his support for the Stipulation at the
meeting before he excused himself from the meeting.
The Merger Agreement provides that promptly upon payment by Purchaser
for IBP Shares purchased pursuant to the Offer, and from time to time
thereafter, IBP shall, upon request of Tyson, promptly use its reasonable best
efforts to take all actions necessary to cause a majority of the IBP Board to
consist of Tyson's designees.
The purpose of the Offer and the Merger is to enable Tyson to acquire
control of, and to acquire the entire equity interest in, IBP.
The Companies
Tyson and Purchaser
Tyson is a Delaware corporation with principal executive offices at
2210 West Oaklawn Drive, Springdale, Arkansas 72762-6999. The telephone number
of Tyson's executive offices is (501) 290-4000. Tyson and its various
subsidiaries produce, distribute and market chicken, Mexican foods, prepared
foods, animal and pet food ingredients and live swine. Tyson's goal is to be the
undisputed world leader in growing, processing and marketing chicken and
chicken-based food products. Tyson is a totally integrated poultry company.
Tyson is able to breed into its flocks the natural characteristics found to be
most desirable. Tyson's integrated operations consist of breeding and rearing
chickens, as well as the processing, further-processing and marketing of these
food products. Tyson's products are marketed and sold to national and regional
grocery chains, regional grocery wholesalers, clubs and warehouse stores,
military commissaries, industrial food processing companies, national and
regional chain restaurants or their distributors, international export companies
and domestic distributors who service restaurants, food service operations such
as plant and school cafeterias, convenience stores, hospitals and other vendors.
Sales are made by Tyson's sales staffs located in Springdale, Arkansas, in
regions throughout the United States and in several foreign countries.
Additionally, sales to the military and a portion of sales to international
markets are made through independent brokers and trading companies. Tyson is a
fully-integrated producer, processor and marketer of a variety of food products.
Tyson presently identifies segments based on the products offered and the nature
of customers, resulting in four reported business segments: Food Service,
Consumer Products, International and Swine. Tyson commenced business in 1935,
was incorporated in Arkansas in 1947, and was reincorporated in Delaware in
1986.
Originally, Tyson was a producer and distributor of fresh chicken.
Tyson developed a strategy to reduce the impact of the commodity market on the
fresh chicken business through value-enhancement. As the industry leader in
value-enhanced chicken products, Tyson utilizes national and regional
advertising, special promotions and brand identification, and meets the varying
demands of its customers through capital expenditures and strategic
5
acquisitions. With further-processed chicken products, grain costs as a
percentage of total product costs are reduced because of the value added to the
products by cutting, deboning, cooking, packaging and/or freezing the chicken.
Tyson's farrow to finish swine operations, which include genetic and
nutritional research, breeding, farrowing and feeder pig finishing and the
marketing of live swine to regional and national packers, are conducted in
Arkansas, Missouri and Oklahoma. Tyson sold approximately 2 million head of
feeder pigs and market weight live swine in fiscal 2000.
Tyson's other groups include Mexican Original, Culinary Foods and
Mallard's Food Products which produce flour and corn tortilla products and
specialty pasta and meat dishes for restaurants, airlines and other major
customers. Tyson's wholly owned subsidiary, Cobb-Vantress, supplies chicken
breeding stock. Tyson's World Resources subsidiary trades agricultural goods
worldwide. Additionally, Tyson's by-products operations convert inedible chicken
by-products into high-grade pet food and animal feed ingredients.
Purchaser is a Delaware corporation incorporated on December 8, 2000,
with principal executive offices at 2210 West Oaklawn Drive, Springdale,
Arkansas 72762-6999. The telephone number of Purchaser's principal executive
offices is (501) 290-4000. To date, Purchaser has engaged in no activities other
than those incident to Purchaser's formation, the commencement of the Initial
Offer, which terminated on February 28, 2001, and the commencement of this
Offer. Purchaser is a wholly owned subsidiary of Tyson.
IBP
IBP is a Delaware corporation, with principal executive offices at 800
Stevens Port Drive, Dakota Dunes, South Dakota 57049. The telephone number of
IBP's executive offices is (605) 235-2061. IBP is one of the world's largest
manufacturers of fresh meats and frozen and refrigerated food products, with
2000 annual sales of approximately $16.9 billion. IBP's five primary business
segments are Beef Carcass, Beef Processing, Pork, Foodbrands America and All
Other. The Beef Carcass segment reduces live fed cattle to dressed carcasses and
other allied products, most of which are sold to other IBP segments. The Beef
Processing segment produces fresh beef and processed beef products that are
typically marketed in the form of boxed beef. The Pork segment reduces live hogs
to fresh and processed pork products that are typically sold in the form of
boxed pork. Boxed beef and pork from the Beef Processing and Pork segments are
marketed mainly in the United States to grocery chains, meat distributors,
wholesalers, retailers, restaurant and hotel chains, and processors who produce
cured and smoked products, such as bacon, ham, luncheon meat and sausage items.
The Foodbrands America segment produces frozen and refrigerated food products
for the foodservice industry. IBP's All Other segment includes IBP's trucking
and warehousing operations, its Canadian beef operations and hide curing and
tanning operations. The Beef Carcass, Beef Processing, Pork and All Other
segments are all operated under IBP's Fresh Meat division, and are sometimes
referred to as Fresh Meats Operations. IBP has over 60 manufacturing locations
in the United States and internationally. IBP has sales offices in North
America, Europe, and Asia. IBP employs approximately 52,000 people.
Shares to be Issued--Tyson Class A Common Stock
We expect that up to _________ shares of Tyson Class A Common Stock
will be issued in connection with the Merger and in connection with the issuance
of Tyson Class A Common Stock upon exercise of options to acquire IBP Shares
that are converted into options to acquire Tyson Class A Common Stock at the
Effective Time (the "Tyson Options"). This number was determined by assuming
that _________ IBP Shares will be converted in the Merger or subject to Tyson
Options at the highest exchange ratio of 2.381 shares of Tyson Class A Common
Stock for each IBP Share. The number of IBP Shares was determined by adding (i)
the number of IBP Shares subject to options (_________) and (ii) 49.9% of the
total number of outstanding IBP Shares (_________), in each case as of
[August___], 2001. The shares of Tyson Class A Common Stock to be issued to
acquire IBP will have the same relative rights, preferences and limitations as
shares presently held by the holders of Tyson Class A Common Stock.
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Purpose of the Issuance
The issuance of Tyson Class A Common Stock in the Merger will
facilitate the acquisition of IBP. Tyson will acquire up to 50.1% of the IBP
Shares for cash pursuant to the Offer. The remaining 49.9% of IBP Shares will be
acquired pursuant to the Merger. The approval of the issuance of Tyson Class A
Common Stock is a condition to the Merger. Additionally, under the rules of the
New York Stock Exchange, Tyson is required to obtain stockholder approval prior
to the issuance of the additional shares of Tyson Class A Common Stock in the
Merger and pursuant to the Tyson Options.
The Tyson stockholders can approve any action without a meeting of the
stockholders by means of a written consent upon the affirmative vote of Tyson
stockholders having not less than the minimum number of votes that would be
required at a meeting at which all votes were present. Accordingly, the approval
of the issuance of Tyson Class A Common Stock in the Transaction pursuant to
such written consent requires the affirmative vote of Tyson stockholders having
at least a majority of the votes represented by all of the outstanding shares of
Tyson Class B common stock, par value $0.10 per share (the "Tyson Class B Common
Stock") and Tyson Class A Common Stock, (collectively, the "Tyson Common
Stock"). As required by the Merger Agreement, on August___, 2001, the holders of
shares representing approximately 90% of the voting power of Tyson Common Stock
delivered to Tyson a written consent approving the issuance of Tyson Class A
Common Stock in the Merger and pursuant to the Tyson Options. As of the date of
the written consent, there were _________ shares of Tyson Class A Common Stock
and 102,645,048 shares of Tyson Class B Common Stock outstanding.
Each share of Tyson Class A Common Stock is entitled to one vote per
share and each share of Tyson Class B Common Stock is entitled to ten votes per
share. Approval of the issuance of Tyson Class A Common Stock will become
effective on [ ____________], 2001.
Plans for IBP
The acquisition of IBP will allow Tyson to expand its business to
include the processing and marketing of beef and pork products. Tyson plans to
use its expertise to accelerate IBP's program to develop value-added convenience
foods and case ready retail products in beef and pork. Except as otherwise
provided herein, it is currently expected that, following the Merger, the
business and operations of IBP will be continued substantially as they are
currently being conducted. Tyson will continue to evaluate the business and
operations of IBP during the pendency of the Offer and after the consummation of
the Offer and the Merger, and will take such actions as it deems appropriate
under the circumstances.
Consequence of Share Issuance
After the additional shares of Tyson Class A Common Stock are issued in
the Merger, there will be more shares of Tyson Class A Common Stock outstanding
and therefore, existing holders of shares of Tyson Class A Common Stock will own
a proportionally smaller percentage of Tyson and have a relatively smaller
percentage of the votes entitled to be cast on any matter. Assuming that the
maximum amount of _________ shares of Tyson Class A Common Stock are issued, the
newly issued Tyson Class A Common Stock will represent approximately [53]% of
the issued and outstanding Tyson Class A Common Stock, ___% of the voting power,
and ____% of all of the Tyson Common Stock.
Fairness Opinions
The board of directors of Tyson (the "Tyson Board of Directors")
received opinions from Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and Stephens Inc. ("Stephens") dated January 1, 2001. Copies
of each of these opinions are attached as Annexes A and B hereto. We urge you to
read the opinions carefully.
Opinion of Merrill Lynch. On January 1, 2001, Merrill Lynch delivered
its oral opinion, which opinion was subsequently confirmed in writing, to the
Tyson Board of Directors to the effect that, as of that date, and based upon the
assumptions made, matters considered and limits of review set forth in its
opinion, the consideration to be paid
7
by Tyson pursuant to the Offer, the exchange offer for IBP Shares not purchased
in the Initial Offer (the "Exchange Offer") and the Merger, taken as a whole,
was fair from a financial point of view to Tyson. Merrill Lynch has not updated,
and Tyson has not asked Merrill Lynch to update, its opinion.
The full text of Merrill Lynch's written opinion, which sets forth the
assumptions made, matters considered and qualifications and limitations on the
review undertaken by Merrill Lynch, is attached as Annex A to this Information
Statement. Each holder of Tyson Common Stock is urged to read this opinion in
its entirety. Merrill Lynch's opinion was intended for the use and benefit of
the Tyson Board of Directors, was directed only to the fairness from a financial
point of view of the consideration to be paid by Tyson in the Transaction, did
not address the merits of the underlying decision by Tyson to engage in the
Transaction and did not constitute a recommendation to any shareholder as to how
that shareholder should vote on the issuance of Tyson Class A Common Stock
pursuant to the Exchange Offer, the Merger Agreement and the Merger or any
related matter. The consideration was determined on the basis of negotiations
between Tyson and IBP and was approved by the Tyson Board of Directors. Tyson
did not provide specific instructions to, or place any limitations on, Merrill
Lynch with respect to the procedures to be followed or factors to be considered
by it in performing its analysis or delivering its opinion. This summary of
Merrill Lynch's opinion is qualified in its entirety by reference to the full
text of the opinion attached as Annex A to this Information Statement.
In arriving at its opinion, Merrill Lynch:
o reviewed certain publicly available business and financial
information relating to Tyson and IBP that Merrill Lynch
deemed to be relevant;
o reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets,
liabilities and prospects of Tyson and IBP furnished to
Merrill Lynch by Tyson and IBP;
o conducted discussions with members of senior management and
representatives of Tyson and IBP concerning the matters
described in the previous two bullet points, as well as their
respective businesses and prospects before and after giving
effect to the Transaction;
o reviewed the market prices and valuation multiples for IBP
Shares and compared them with those of certain publicly-traded
companies that Merrill Lynch deemed to be relevant;
o reviewed the results of operations of IBP and compared them
with those of certain publicly-traded companies that Merrill
Lynch deemed to be relevant;
o participated in certain discussions an negotiations among
representatives of Tyson and IBP and their financial and legal
advisors;
o compared the proposed financial terms of the Transaction with
the financial terms of certain other transactions that Merrill
Lynch deemed to be relevant;
o reviewed the potential pro forma impact of the Transaction;
o reviewed the Merger Agreement; and
o reviewed other financial studies and analyses and took into
account other matters as Merrill Lynch deemed necessary,
including Merrill Lynch's assessment of general economic,
market and monetary conditions.
In preparing its opinion, Merrill Lynch assumed and relied on the
accuracy and completeness of all information supplied or otherwise made
available to Merrill Lynch, discussed with or reviewed by or for Merrill Lynch,
or made publicly available, and Merrill Lynch did not assume any responsibility
for independently verifying that information or for undertaking an independent
evaluation or appraisal of any of the assets or liabilities of Tyson
or IBP and was not furnished with any such evaluation or appraisal. In addition,
Merrill Lynch did not assume any
8
obligation to conduct any physical inspection of the properties or facilities of
Tyson or IBP. With respect to the financial forecast information furnished to or
discussed with Merrill Lynch by Tyson or IBP, Merrill Lynch assumed that they
were reasonably prepared and reflected the best currently available estimates
and judgment of Tyson's or IBP's management as to the expected future financial
performance of Tyson or IBP, as the case may be. Merrill Lynch further assumed
that the Offer, the Exchange Offer and the Merger, taken together, would
constitute a tax-free reorganization for U.S. federal income tax purposes.
Merrill Lynch's opinion was necessarily based upon market, economic and
other conditions as they existed and could be evaluated on, and on the
information made available to Merrill Lynch as of the date of its opinion.
Merrill Lynch assumed that in the course of obtaining the necessary regulatory
or other consents or approvals, contractual or otherwise, for the Merger, no
restrictions, including any divestiture requirements or amendments or
modifications, would be imposed that would materially affect the contemplated
benefits of the Transaction.
In addition, Merrill Lynch expressed no opinion as to the prices at
which shares of Tyson Class A Common Stock or IBP Shares would trade following
the announcement or consummation of the Merger, as the case maybe.
The Tyson Board of Directors selected Merrill Lynch to act as its
financial advisor because of Merrill Lynch's reputation as an internationally
recognized investment banking firm with substantial experience in transactions
similar to the Transaction and because Merrill Lynch is familiar with Tyson and
its business. As part of Merrill Lynch's investment banking businesses, Merrill
Lynch is continually engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, leveraged buyouts, negotiated
underwritings, secondary distributions of listed and unlisted securities and
private placements.
Under the terms of a letter agreement between Tyson and Merrill Lynch
dated December 1, 2000, and the Dealer Manager Agreement dated December 11,
2000, Tyson:
o paid Merrill Lynch $2 million upon commencement of the Initial
Offer; and
o agreed to pay Merrill Lynch $14 million upon the acceptance
for payment by Tyson of IBP Shares pursuant to the Offer,
against which the $2 million fee referred to above will be
credited.
Tyson and Merrill Lynch entered into a new Dealer Manager Agreement
dated July 3, 2001 which did not provide for any additional payment of fees by
Tyson to Merrill Lynch.
Under the Dealer Manager Agreements dated December 11, 2000 and July 3,
2001, Tyson has agreed to reimburse Merrill Lynch for its reasonable
out-of-pocket expenses incurred in connection with its engagement, including the
reasonable fees and disbursements of legal counsel, and to indemnify Merrill
Lynch and related parties from and against specified liabilities, including
liabilities under the federal securities laws, arising out of its engagement.
Merrill Lynch has, in the past, provided financial advisory and
financing services to Tyson and/or its affiliates for which it has received
customary compensation, and may continue to do so and may receive additional
fees for the rendering of those services. Certain affiliates of Merrill Lynch
have entered into loan agreements (along with certain other lending
institutions) to provide Tyson financing in connection with the Offer and the
Merger, for which such affiliates will receive customary compensation. In
addition, in the ordinary course of Merrill Lynch's business, Merrill Lynch and
its affiliates may actively trade Tyson Class A Common Stock and other
securities of Tyson, as well as IBP Shares and other securities of IBP, for
their own accounts and for the accounts of customers. Accordingly, Merrill Lynch
and its affiliates may at any time hold a long or short position in such
securities.
Opinion of Stephens
On January 1, 2001, Stephens delivered its oral opinion, which opinion
was subsequently confirmed in writing, to the Tyson Board of Directors to the
effect that, as of that date, and based upon the assumptions made, matters
considered and limits of review set forth in its opinion, the consideration to
be paid by Tyson pursuant to the
9
Merger Agreement in the aggregate was fair from a financial point of view to
Tyson. Stephens has not updated, and Tyson has not asked Stephens to update, its
opinion.
The full text of Stephens' written opinion, which sets forth the
assumptions made, matters considered and qualifications and limitations on the
review undertaken by Stephens, is attached as Annex B to this Information
Statement. Each holder of Tyson Common Stock is urged to read this opinion in
its entirety. Stephens' opinion was intended for the use and benefit of the
Tyson Board of Directors, was directed only to the fairness from a financial
point of view of the consideration to be paid by Tyson pursuant to the Merger
Agreement, and did not address the merits of the underlying decision by Tyson to
engage in the Transaction. The consideration was determined on the basis of
negotiations between Tyson and IBP and was approved by the Tyson Board of
Directors. Tyson did not provide specific instructions to, or place any
limitations on, Stephens with respect to the procedures to be followed or
factors to be considered by it in performing its analysis or delivering its
opinion. This summary of Stephens' opinion is qualified in its entirety by
reference to the full text of the opinion attached as Annex B to this
Information Statement.
In arriving at its opinion, Stephens:
o analyzed certain publicly available financial statements and
reports regarding IBP and Tyson;
o analyzed certain internal financial statements and other
financial and operating data (including financial projections)
concerning IBP and Tyson prepared by management of IBP and
Tyson;
o analyzed balance sheets, capitalization ratios, earnings and
book value both in the aggregate and, where applicable, on a
per share basis during certain periods;
o reviewed the reported prices and trading activity of IBP
Shares and Tyson Common Stock;
o compared the financial performance of IBP and Tyson and the
prices and trading activity of IBP Shares and Tyson Class A
Common Stock with that of certain other comparable
publicly-traded companies and their securities;
o reviewed the financial terms, to the extent publicly
available, of certain comparable transactions;
o reviewed the Merger Agreement and related documents;
o discussed with management of Tyson the operations of and
future business prospects for IBP and Tyson and the
anticipated financial consequences of the Transaction; and
o performed such other analyses and provided such other services
as we have deemed appropriate.
In arriving at its opinion, Stephens relied on the accuracy and
completeness of the information and financial data provided to Stephens by
Tyson, and Stephens' opinion is based upon such information. Stephens did not
inquire into the reliability of such information and financial data recognizing
that it was rendering only an informed opinion and not an appraisal or
certification of value. With respect to the financial projections prepared by
management of IBP and Tyson, Stephens assumed that they were reasonably prepared
on bases reflecting the best currently available estimates and judgments of the
future financial performance of IBP and Tyson. Stephens did not express any
opinion as to the prices at which Tyson Common Stock or IBP Shares would trade
following the announcement or consummation of the Transaction.
Stephens' opinion was necessarily based upon market, economic and other
conditions as they existed and could be evaluated on, and on the information
made available to Stephens as of the date of its opinion.
The Tyson Board of Directors retained Stephens as an independent
contractor to act as financial advisor with respect to the Transaction. Stephens
is a nationally recognized investment banking and advisory firm. Stephens, as
part of its investment banking business, regularly issues fairness opinions and
is continually engaged in
10
the valuation of companies and their securities in connection with business
reorganizations, private placements, negotiated underwritings, mergers and
acquisitions and valuations for estate, corporate and other purposes. Stephens
is familiar with Tyson and IBP and regularly provides investment banking
services to Tyson and issues periodic research reports regarding its business
activities and prospects. In the ordinary course of business, Stephens and its
affiliates at any time may hold long or short positions, and may trade or
otherwise effect transactions as principal or for the accounts of customers, in
debt or equity securities or options on securities of Tyson and IBP.
In consideration for Stephens' services as financial advisor to Tyson,
Tyson paid to Stephens a fee of $1 million upon the rendering of a fairness
opinion. Tyson has also agreed to reimburse Stephens for its reasonable out-
of-pocket expenses, including fees and disbursements of its legal counsel,
incurred in connection with its activities as financial advisor to Tyson, and to
indemnify Stephens and certain related persons against certain liabilities in
connection with its engagement, including certain liabilities under the federal
securities laws.
Background
As part of the continuous evaluation of its businesses and plans, Tyson
regularly considers a variety of strategic options and transactions. In recent
years, as part of this process, Tyson has evaluated various alternatives for
expanding its business, including through acquisitions and discussions with IBP
from time to time.
On October 2, 2000, IBP and Donaldson, Lufkin & Jenrette, Inc. ("DLJ")
jointly announced that Rawhide Holdings Corporation, a wholly owned subsidiary
of DLJ Merchant Banking Partners III, L.P., a private equity fund affiliated
with DLJ, had entered into an Agreement and Plan of Merger dated October 1,
2000, among IBP, Rawhide Holding Corporation and Rawhide Acquisition
Corporation, to acquire the outstanding IBP Shares in a transaction whereby each
IBP Share would be converted into the right to receive $22.25 in cash (the
"Rawhide Agreement").
On October 27, 2000, Brandes Investment Partners, L.P., Brandes
Investment Partners Inc., Brandes Holdings, L.P., Charles H. Brandes, Glenn R.
Carlson and Jeffrey A. Busby, together the holders of 9.12% of the outstanding
IBP Shares, disclosed in a public filing with the SEC their intention to vote
against the merger proposed by the Rawhide Agreement and to consider asserting
their appraisal rights under Delaware law.
On November 13, 2000, Smithfield Foods, Inc. ("Smithfield") announced
in a public filing with the SEC its offer to acquire the outstanding IBP Shares
for $25 per IBP Share payable in Smithfield common stock. Also, on November 13,
2000, the Special Committee announced that it would begin discussions with
Smithfield. Thereafter, on November 16, 2000, IBP and Smithfield announced that
they entered into a confidentiality agreement.
On November 21, 2000, John Tyson, Chairman, President and Chief
Executive Officer of Tyson, contacted Richard Bond, President and Chief
Operating Officer of IBP, and inquired as to whether there might be any interest
in discussing a combination of IBP and Tyson. As a follow up to this discussion,
John Tyson and other senior Tyson executives initiated a meeting with Robert
Peterson, Chairman and Chief Executive Officer of IBP, and Mr. Bond on November
24, 2000. During the subsequent week, Mr. Tyson initiated other conversations
with both Mr. Peterson and Mr. Bond.
On December 4, 2000, Tyson sent a letter to the Special Committee
outlining a proposal to acquire IBP, which included the following terms:
o Tyson would acquire all outstanding IB Shares in a two-step
merger pursuant to a definitive agreement in which IBP
stockholders would receive cash and Tyson Class A Common Stock
valued at $26.00 for each IBP Share;
o to effect the transaction, Tyson would first commence a cash
tender offer for up to 50.1% of outstanding IBP Shares; and
o after conclusion of such tender offer, Tyson would effect a
merger in which each remaining IBP Share would be converted
into $26.00 of Tyson Class A Common Stock, subject to a
maximum exchange ratio of 2.063 Tyson shares and a minimum
exchange ratio of 1.688 Tyson shares per IBP Share.
11
On December 4, 2000, the Special Committee sent Tyson a letter stating
that the Special Committee had determined that Tyson's proposal met the
applicable threshold under the Rawhide Agreement and was prepared to enter into
discussions with Tyson regarding its proposal.
On December 4, 2000, IBP and Tyson entered into a confidentiality
agreement (the "Confidentiality Agreement"), a copy of which is filed as an
exhibit to the Tender Offer Statement on Schedule TO filed by Tyson and
Purchaser (the "Schedule TO"), pursuant to which Tyson agreed to keep
confidential certain information it and its advisors received from IBP and its
advisors in connection with Tyson's evaluation of a potential transaction. Under
the Confidentiality Agreement, Tyson was prohibited, prior to March 31, 2001,
from making any proposals to acquire less than all of the outstanding IBP
Shares, and from acquiring additional IBP Shares in the open market if such
acquisition would result in Tyson beneficially owning more than 9.9% of the
outstanding IBP Shares, except in each case under certain circumstances.
On December 5 and 6, 2000, representatives of Tyson and its legal and
financial advisors visited the offices of counsel to the Special Committee to
conduct preliminary due diligence. On December 8, 2000, representatives of Tyson
met with IBP's management to conduct further due diligence and to discuss issues
in connection with a possible acquisition of IBP.
On December 11, 2000, John Tyson spoke with Jo Ann R. Smith,
Chairperson of the Special Committee, informing her that Tyson would be
initiating the Initial Offer. On December 11, 2000, Tyson announced its
intention to commence the Initial Offer. Tyson also delivered a form of merger
agreement to IBP. On December 12, 2000, Tyson commenced the Initial Offer.
On December 18, 2000, Tyson and IBP entered into a confidentiality
agreement substantially similar to the Confidentiality Agreement, providing for
Tyson to provide due diligence information to IBP, a copy of which was filed as
an exhibit to the Schedule TO. During this period, representatives of Tyson and
IBP continued to conduct due diligence with respect to the business and
operations of the other.
On December 21, 2000, Tyson received a letter from JP Morgan Securities
Inc. ("JP Morgan"), on behalf of the Special Committee, inviting Tyson to submit
a "best and final offer" between 4:00 p.m. and 5:00 p.m. on Friday, December 29,
2000.
On December 27, 2000, John Tyson and other representatives of Tyson
addressed the Special Committee and its advisors by telephone with respect to
the business and operations of Tyson.
On December 28, 2000, Tyson delivered a letter to the Special Committee
outlining the terms of a revised proposal and issued a press release disclosing
those terms which included the following terms:
o in response to the Special Committee's request, Tyson
increased the Initial Offer for up to 50.1% of the outstanding
IBP Shares to $27.00 in cash per IBP Share and would acquire
the remaining IBP Shares for $27.00 of Tyson Class A Common
Stock, subject to adjustment;
o Tyson's bid would remain open until the close of business on
Thursday, January 4, 2001; and
o Tyson proposed to commence an exchange offer for all IBP
Shares not purchased in the Initial Offer.
During the course of Saturday, December 30, 2000, representatives of
Tyson and the Special Committee negotiated the terms of Tyson's proposal. On
December 30, 2000, Tyson increased the per IBP Share price offered in the
Initial Offer, the Exchange Offer and the merger to acquire any remaining IBP
Shares not purchased in the Initial Offer or the Exchange Offer (the "Initial
Merger") to $28.50. On Sunday, December 31, 2000, representatives of Tyson and
IBP continued negotiations and the Special Committee asked Tyson to increase its
offer. On January 1, 2001, Tyson increased the per IBP Share price offered in
the Initial Offer, the Exchange Offer and the Initial Merger to $30.00 per IBP
Share and Tyson, the Purchaser and IBP executed the Merger Agreement.
12
On January 2, 2001, Tyson issued a press release amending the terms of
the Initial Offer to conform to the terms of the Merger Agreement, including
increasing the cash price offered to $30.00 per IBP Share.
On January 4, 2001, Smithfield filed Amendment No. 4 to Schedule 13D
with the SEC, in which it disclosed that it had sold 2,555,000 IBP Shares on
January 2 and 3, thus reducing the number of IBP Shares that were beneficially
owned to 4,409,341, representing approximately 4.2% of the outstanding IBP
Shares.
On January 5, 2001, Tyson filed its amended cash tender offer documents
for the Initial Offer with the SEC to conform to the terms of the Merger
Agreement, including increasing the cash price offered to $30.00 per IBP Share.
IBP filed an amended Schedule 14D-9 in response to Tyson's amended cash tender
offer. Tyson's amended cash tender offer documents and IBP's amended Schedule
14D-9 were mailed to the stockholders of IBP on or about January 5, 2001.
On January 10, 2001, IBP advised Tyson that on December 29, 2000,
counsel to the Special Committee received a comment letter from the SEC in
connection with IBP's proxy statement prepared and filed with the SEC in
connection with the Rawhide Agreement. The comment letter also contained
comments on IBP's historical financial statements. IBP furnished a copy of the
letter to Tyson on January 10, 2001. On January 11, 2001, Tyson delivered a
letter to the Special Committee in which it expressed its unhappiness that it
had not been made aware of the comment letter before it signed the Merger
Agreement. Tyson said that it would not be in a position to commence the
Exchange Offer until IBP's accountants resolved the SEC issues. Tyson said it
was assessing the materiality and impact of the comments and the requirement of
a restatement of IBP's financial statements.
On January 17, 2001, Tyson filed amended cash tender offer documents
with the SEC to extend the Initial Offer until January 24, 2001. On January 25,
2001, Tyson filed amended cash tender offer documents with the SEC to extend the
Initial Offer until February 7, 2001. Tyson announced that it was delaying the
commencement of the Exchange Offer and the closing of the Initial Offer pending
the satisfaction of the SEC with the resolution of various accounting issues
raised by the SEC's comment letter and Tyson's opportunity to assess the impact
of any changes to IBP's financial statements and business.
On January 26, 2001, IBP's Chief Executive Officer, Mr. Peterson, sent
a letter to Tyson, which was released publicly, in which he stated that IBP had
submitted written responses to the SEC that IBP's management believed addressed
all of the SEC's concerns. In addition, Mr. Peterson noted that IBP was
continuing to review the operations of its DFG Foods subsidiary, and that, based
upon a preliminary review, IBP's management believed that additional reductions
in pre-tax earnings of up to $47 million would need to be taken, in addition to
possible reductions for impairment of goodwill or other long-lived assets
associated with DFG Foods. Mr. Peterson stated that IBP's management would
continue to keep Tyson informed of any developments.
At 11:59 p.m. on January 27, 2001, the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
with respect to the Tyson transaction expired without any further action by the
Department of Justice. On February 6, 2001, Tyson filed amended cash tender
offer documents with the SEC to extend the Initial Offer until February 20,
2001. On February 21, 2001, Tyson filed amended cash tender offer documents with
the SEC to extend the Initial Offer until February 28, 2001.
On February 22, 2001, IBP issued a press release in which it announced
that it was in the process of finalizing amendments to financial statements
filed by IBP with the SEC in 2000. IBP stated that the amendments would reflect
revisions IBP made based upon the results of IBP's investigation of
improprieties at its DFG Foods subsidiary, as well as certain other revisions
made in response to an SEC review of various other IBP filings.
On February 26, 2001, representatives of IBP contacted Tyson's
representatives and proposed that Tyson extend the Initial Offer for a period
ending two business days after IBP had resolved its accounting issues with the
SEC and refiled its periodic reports and provided audited financials for the
fiscal year 2000. On February 27, 2001, Tyson management advised IBP management
that Tyson had decided to allow the Initial Offer to expire and to proceed with
the Cash Election Merger (as defined herein) provided for under the Merger
Agreement. On February 28, 2001, Tyson announced that, since the conditions to
the Initial Offer were not satisfied, it was going to terminate the Initial
Offer and begin to work on the Cash Election Merger with IBP, in accordance with
the Merger Agreement.
13
On March 13, 2001, IBP filed with the SEC amendments to the following
amended and restated reports:
o its Annual Report on Form 10-K for the fiscal year ended
December 25, 1999;
o its Quarterly Reports on Form 10-Q for the 13 weeks ended
March 25, 2000, the 26 weeks ended June 24, 2000 and the 39
weeks ended September 23, 2000, respectively; and
o its Current Report on Form 8-K dated November 3, 2000.
In addition, IBP issued a press release in which it announced that the
only remaining issue left to be resolved before it could issue 2000 earnings was
the amount of the non-cash impairment charge to the carrying value of DFG Foods'
long-lived assets. IBP also summarized the effect of the amendments on its
historical financial statements. IBP stated that the amendments included the
following:
o A restatement to reflect adjustments due to financial
misstatements and irregularities at its DFG Foods subsidiary.
The restatement involved additional charges totaling $32.9
million. This consisted of a $15.5 million pre-tax charge to
the fourth quarter of 1999, and a total of $17.4 million in
pre-tax charges in the first three quarters of 2000. Also,
there was an additional $12.0 million charge taken in the
fourth quarter. These charges increased the cost of products
sold and selling, general and administrative expenses for the
affected periods.
o A change in accounting treatment of a stock option program
from 'fixed accounting' to 'variable plan' accounting
principles to recognize expense for certain options granted to
officers of IBP during the period 1993 to 2000. Early in 1993,
upon the recommendation of a well-known compensation
consulting firm, certain administrative rules were adopted for
the 1993, and subsequently for the 1996, stockholder approved
stock option plans. It was determined that these rules, which
authorized bonus options under certain circumstances, created
a feature that required the application of 'variable plan'
accounting principles, which mandated a compensation charge or
credit in the income statement based on the difference between
the market value and the exercise price at the end of each
period. Previously, IBP followed fixed accounting for these
options treating the original grants and the bonus grants as
two separate grants. From 1993 through the third quarter of
2000, the effect of the cumulative compensation charge on net
earnings was approximately $7.3 million. On a quarter-by-
quarter basis, the charge against net earnings was as much as
$9.3 million while the credit to net earnings was as high as
$9.4 million. The impact on net earnings in the fourth quarter
of 2000 was an additional $9.5 million; however, the total
impact for 2000 was approximately $9.8 million. All of these
compensation charges were non-cash charges.
o Expansion of reportable business segment information for IBP
from two segments to five. These new reportable segments were
additional disclosures and had no effect on the historical
consolidated financial results of prior filings.
o Change in method of accounting for revenue recognition in
accordance with new accounting guidance. Effective first
quarter of 2000, IBP changed its method of accounting for
revenue recognition in accordance with the SEC's Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements. As a result of this guidance, IBP will recognize
revenue upon delivery to customers. Previously, IBP had
recognized revenue upon shipment to customers. The cumulative
effect of the change resulted in a charge to earnings of $2.4
million (net of income taxes of $1.5 million) or $0.02 per
share. The effect of the change through the nine months ended
September 23, 2000 was to decrease net earnings, before the
cumulative impact of the accounting change, by $1.7 million or
$0.02 per share. All public companies were required to adopt
this bulletin's guidance no later than the fourth quarter of
2000.
IBP also noted that the amendments had the following effect on
previously reported net earnings per share (EPS) in 1999 and 2000:
14
Net Earnings Per Share
Period As Previously
Reported Restated
-------- --------
1999 EPS -Diluted .............................. $ 2.94 $ 2.96
2000 Q1 EPS -Diluted ........................... $ 0.16 $ 0.13
2000 Q2 EPS-Diluted ............................ $ 0.55 $ 0.43
2000 Q3 EPS-Diluted ............................ $ 0.73 $ 0.74
2000 Q3 -YTD EPS-Diluted ....................... $ 1.44 $ 1.30
On March 14, 2001, IBP issued a press release stating that a recent
analyst projection of $0.12 per share of earnings for IBP for the first quarter
of 2001 was reasonable, and that IBP continued to believe that earnings for the
full year 2001 could be in the $1.80 to $2.20 per share range.
Tyson also issued a press release on March 14, 2001, stating that the
non-cash impairment charge relating to IBP's DFG Foods subsidiary had not been
settled and IBP had not filed its 2000 Form 10-K, and that Tyson was continuing
with its due diligence and closely monitoring all factors related to IBP's
business. Tyson also stated in the release that it was still too early to
determine what effect these issues will have on the transaction structure.
On March 20, 2001, IBP issued a press release in which it reported that
it would record a fourth quarter 2000 nonrecurring, pre-tax impairment charge of
$60.4 million to its DFG Foods subsidiary's goodwill carrying value. In
addition, IBP released its earnings results for the fourth quarter of 2000 and
for the full year 2000, and projected that its earnings for the full year 2001
could be in the $1.80 to $2.20 per share range.
On March 29, 2001, Tyson issued a press release in which it stated that
it was discontinuing the Merger Agreement. In addition, Tyson commenced legal
action in the Chancery Court of Washington County, Arkansas seeking to rescind
or terminate the Merger Agreement and to receive compensation from IBP. On March
30, 2001, IBP filed cross-claims against Tyson and Purchaser in a previously
filed action in the Court of Chancery of the State of Delaware in and for New
Castle County, Delaware seeking a declaratory judgment that Tyson had no right
to rescind or terminate the Merger Agreement and a decree of specific
performance by Tyson of its obligations under the Merger Agreement.
In April and May, 2001, Tyson and IBP litigated their claims against
each other. On June 15, 2001, the Delaware Court of Chancery issued its
Memorandum Opinion directing specific performance by Tyson of the Merger
Agreement. Since then, the parties have negotiated the terms of the order
required by the Delaware Court of Chancery, resulting in the Stipulation and the
Transaction.
On June 28, 2001, IBP and Tyson announced that Robert L. Peterson,
IBP's Chairman and Chief Executive Officer, and Richard L. Bond, IBP's President
and Chief Operating Officer, have agreed to become members of Tyson's Board of
Directors upon closing of the Merger.
On July 3, 2001, Tyson and Purchaser commenced the Offer to purchase up
to a number of IBP Shares which, together with the IBP Shares already owned by
Tyson, would represent 50.1% of the outstanding IBP Shares for $30.00 per IBP
Share. The Offer was scheduled to expire on August 3, 2001.
On August 3, 2001, Tyson entered into definitive loan agreements with
various lenders to provide financing for the funds required by Tyson to purchase
the IBP Shares tendered in the Offer. Also, on August 3, 2001, the Delaware
Chancery Court approved a settlement of the IBP stockholder litigation pending
in that court.
On August 3, 2001, the Offer expired. On August 4, 2001, Tyson issued a
press release announcing the successful completion of the Offer and that Tyson
would purchase a number of IBP Shares which, together with the IBP Shares
already owned by Tyson, would represent 50.1% of the outstanding IBP Shares.
Approximately 99.1% of the outstanding IBP Shares were tendered by IBP
stockholders.
Regulatory Requirements
In connection with the Offer and the Merger, Tyson is required to make
a number of filings with various federal and state governmental agencies,
including:
o filing of a certificate of merger with the Secretary of State
of the State of Delaware in accordance with the General
Corporation Law of the State of Delaware after the approval of
the Merger by IBP's stockholders;
o complying with federal and state securities laws and the
federal tender offer and proxy rules;
o notifying and furnishing certain information to the Federal
Trade Commission ("FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") pursuant to
the HSR Act; and
15
o complying with any applicable non-Unit States laws intended to
prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade.
Under the HSR Act and the rules that have been promulgated thereunder
by the FTC, certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division and the FTC and
certain waiting period requirements have been satisfied. The acquisition of IBP
is subject to this requirement. Pursuant to the requirements of the HSR Act,
Tyson filed a Notification and Report Form with respect to the Initial Offer,
the Exchange Offer and the Initial Merger with the Antitrust Division and the
FTC on December 12, 2000. Absent a request for additional information, the
initial waiting period applicable to the purchase of IBP Shares pursuant to the
Initial Offer was to expire at 11:59 p.m., New York City time, on Wednesday,
December 27, 2000. On December 28, 2000, Tyson announced that, prior to the
expiration of the waiting period, the Antitrust Division extended the waiting
period by requesting additional information from Tyson. At 11:59 p.m. on January
27, 2001, the waiting period under the HSR Act expired without any further
action by the Department of Justice.
Material Federal Income Tax Consequences
Tyson and its existing stockholders will not recognize any gain or loss
on the issuance of Tyson Class A Common Stock in the Merger.
Accounting Treatment
The Merger will be accounted for using the purchase method of
accounting for business combinations in accordance with accounting principles
generally accepted in the U.S. ("GAAP").
Appraisal Rights
Appraisal rights are not available to holders of Tyson Class A Common
Stock or Tyson Class B Common Stock in connection with the issuance of Tyson
Class A Common Stock in the Merger.
FINANCIAL INFORMATION
Selected Financial Data for Tyson
The following selected consolidated financial data relating to Tyson
and its subsidiaries has been taken or derived from the audited financial
statements contained in Tyson's Form 10-K for fiscal years ended September 27,
1997, October 3, 1998 and September 30, 2000 and the unaudited financial
statements contained in Tyson's Form 10-Q for the six months ended April 1, 2000
and March 31, 2001. See section entitled "Certain Comparative and Pro Forma
Financial Information" for information regarding the compilation of data
presented in the column below entitled "Tyson Historical Pro Forma Combined
(unaudited)." Additionally, the Pro Forma combined total assets and long-term
debt at September 30, 2000 were derived from the audited financial statements of
Tyson contained in the Tyson 10-K and the unaudited financial statements of IBP
contained in IBP's restated financial statements contained in IBP's Quarterly
Report on Form 10-Q dated September 23, 2000.
More comprehensive financial information is included in such reports
and the other documents filed by Tyson with the SEC, which are incorporated by
reference in this Information Statement. Such reports and other documents may be
obtained as described in the section captioned "Available Information."
16
26 Weeks ended
52/53 Weeks ended (Unaudited)
----------------------------------------------------------- --------------------
Sept. 28, Sept. 27, Oct. 3, Oct. 2, Sept. 30, April 1, March 31,
1996 1997 1998 1999 2000 2000 2001
------- ------- ------- ------- ------- ------- -------
(in millions of dollars, except per share amounts)
Income Statement Data:
Revenues ....................... $ 6,454 $ 6,356 $ 7,414 $ 7,363 $ 7,158 $ 3,570 $ 3,571
Income before minority interest 84 186 25 242 151 99 20
Net income ..................... 87 186 25 230 151 93 21
Balance Sheet Data:
Total assets ................... $ 4,544 $ 4,411 $ 5,242 $ 5,083 $ 4,854 $ 4,917 $ 4,871
Long-term debt ................. 1,806 1,558 1.967 1,515 1,357 1,526 1,448
Short-term borrowings .......... 169 132 162 289 185 144 155
Shareholders' equity ........... 1,542 1,621 1,970 2,128 2,175 2,153 2,139
Cash Flow Data:
Cash flows from operations ..... $ 173 $ 541 $ 496 $ 547 $ 587 $ 299 $ 172
Cash flows from (used in)
financing activities ......... 52 (418) (27) (395) (366) (200) 13
Cash flows (used in)
investing activities ......... (222) (136) (446) (166) (206) (97) (145)
Earnings Per Shared Data:
Basic .......................... $ 0.40 $ 0.86 $ 0.11 $ 1.00 $ 0.67 $ 0.41 $ 0.09
Diluted ........................ $ 0.40 $ 0.85 $ 0.11 $ 1.00 $ 0.67 $ 0.41 $ 0.09
Cash Dividends Per Share:
Class A Common Stock ........... $ 0.080 $ 0.095 $ 0.100 $ 0.115 $ 0.160 $ 0.080 $ 0.080
Class B Common Stock ........... $ 0.072 $ 0.086 $ 0.090 $ 0.104 $ 0.144 $ 0.072 $ 0.072
Ratio of earning to fixed charges: -- -- -- 3.34 2.63 3.03 1.46
Tyson Historical Pro Forma Combined (unaudited): September 30, 2000 March 31, 2001
------------------ --------------
(in millions of dollars, except per share amounts)
Revenues $ 23,833 $ 12,108
Income before accounting change and extraordinary loss 346 14
Total assets 10,331 10,377
Long-term debt 3,696 3,811
Earnings per share data before accounting change
and extraordinary loss:
Basic $ 0.99 $ 0.04
Diluted $ 0.98 $ 0.04
Cash dividends per share:
Class A common stock $ 0.085 $ 0.043
Class B common stock $ 0.144 $ 0.072
-------------------
1. The results for 2000 include a $24 million pretax charge for bad debt
write-off related to the January 31, 2000, bankruptcy filing of
AmeriServe Food Distribution, Inc. and a $9 million pretax charge
related to Tyson de Mexico losses.
2. The results for 1999 include a $77 million pretax charge for loss on a
sale of assets and impairment write- downs.
3. Significant business combination accounted for as a purchase: Hudson
Foods, Inc. on January 9, 1998.
4. The results for 1998 include a $215 million pretax charge for asset
impairment and other charges.
5. For the purposes of calculating the ratio of earnings to fixed charges,
"earnings" consist of income from continuing operations before income
taxes and fixed charges (excluding capitalized interest). "Fixed
charges"
17
consist of (i) interest on indebtedness, whether expensed or
capitalized, but excluding interest to fifty-percent- owned
subsidiaries, (ii) that portion of rental expense Tyson believes to be
representative of interest (one-third of rental expense) and (iii)
amortization of debt discount and expenses.
Selected Financial Data for IBP
The following selected consolidated financial data relating to IBP and
its subsidiaries has been taken or derived from the audited financial statements
contained in IBP's Annual Report on Form 10-K for the fiscal year ended December
30, 2000 (2000 was a 53-week year), and the unaudited financial statements
contained in IBP's Form 10--Q for the 13 weeks ended March 25, 2000 and March
31, 2001. More comprehensive financial information is included in such reports
and the other documents filed by IBP with the SEC, and the financial data set
forth below is qualified in its entirety by reference to such reports and other
documents, including the financial statements and related notes contained
therein. Such reports and other documents may be obtained as described in the
section captioned "Available Information." The selected short-term borrowings
data, cash flow data and basic earnings per share data for the fiscal years
ended December 28, 1996, December 27, 1997 and December 26, 1998 are derived
from information provided by IBP.
13 Weeks Ended
52/53 Weeks ended (unaudited)
---------------------------------------------- -------------------
Restated Restated Restated Restated Restated
Dec. 28, Dec. 27, Dec. 25, Dec. 25, Dec. 30, Mar. 25, Mar. 31,
1996(4) 1997(4) 1998(4) 1999(4)(5) 2000 2000(4)(5) 2001
-------- -------- -------- ---------- -------- ---------- --------
(in millions of dollars, except per share amounts)
Income Statement Data:
Revenues (1).......................... $12,951 $13,881 $13,735 $15,122 $16,950 $3,955 $4,127
Income before accounting change and
extraordinary item.................. 198 122 198 318 153 34 20
Net income............................ 198 122 183 318 135 16 19
Balance Sheet Data:
Total assets.......................... $ 2,174 $ 2,972 $ 3,313 $ 4,144 $ 4,426 $4,233 $4,510
Long-term debt, capital leases and
redeemable preferred stock
(excluding current portion)......... 260 635 761 790 659 710 688
Short-term borrowings................. 1 194 152 555 833 761 1,017
Common stock equity................... 1,194 1,236 1,391 1,700 1,850 1,724 1,865
Cash Flow Data:
Cash flows from (used in) operations.. $ 291 $ 199 $ 342 $ 318 $ 378 $ (3) $ (107)
Cash flows from (used in) financing
activities.......................... (23) 132 15 404 75 89 188
Cash flows (used in) investing
activities.......................... (290) (354) (397) (720) (456) (84) (96)
Earnings Per Share Data:
Basic earnings per share before
accounting change and extraordinary
item................................ $ 2.09 $ 1.26 $ 2.02 $ 3.26 $ 1.41 $ 0.29 $ 0.19
Accounting change (2)................. -- -- -- -- (0.02) (0.02) --
Extraordinary item (3)................ -- -- (0.15) -- (0.14) (0.14) (0.01)
Basic earnings per share.............. 2.09 1.26 1.87 3.26 1.25 0.13 0.18
Diluted earnings per share before
accounting change and extraordinary
item................................ 2.06 1.20 1.86 2.96 1.40 0.29 0.19
Accounting change..................... -- -- -- -- (0.02) (0.02) --
Extraordinary item.................... -- -- (0.14) -- (0.14) (0.14) (0.01)
Diluted earnings per share............ 2.06 1.20 1.72 2.96 1.24 0.13 0.18
Cash dividends per share.............. 0.10 0.10 0.10 0.10 0.10 0.025 0.025
(1) Freight charges previously netted against sales have bee reclassified
to cost of goods sold in prior years to conform with the current year
presentation.
(2) Cumulative effect of change in accounting principle, net of applicable
income taxes.
(3) Extraordinary loss on extinguishment of debt, net of applicable income
taxes.
18
(4) The financial information presented for 1996 through 199 and the 13
weeks ended March 25, 2000 has been restated for the application of
variable plan accounting for certain stock options. The impact of
variable plan accounting increased (decreased) selling, general and
administrative expense in fiscal years 1999, 1998, 1997 and 1996 by
$(12.0) million, $11.0 million, $(1.9) million and $1.2 million,
respectively. Net earnings were increased (decreased) by $10.8 million,
$(9.8) million, $1.8 million and $(1.1) million and earnings per
diluted share by $0.11, $(0.09), $0.02 and $(0.01), respectively, in
fiscal years 1999, 1998, 1997 and 1996. For the 13 weeks ended March
25, 2000, the impact of variable plan accounting decreased selling,
general and administrative expense by $2.9 million and increased net
income and earnings per diluted share by $2.6 million and $0.02 per
share, respectively.
(5) The financial information for 1999 has also been restate to reflect
$15.5 million of pre-tax adjustments for irregularities and
misstatements at one of IBP's subsidiaries. These adjustments resulted
in an $8.7 million increase in previously reported cost of products
sold and a $6.8 million increase in selling, general and administrative
expenses. The related tax impact of these adjustments of $5.9 million
has also been reflected. The impact of these adjustments reduced net
earnings by $9.6 million and related basic and diluted earnings per
share by $0.10 and $0.09, respectively, for amounts previously reported
for fiscal 1999. For the 13 weeks ended March 25, 2000, these
adjustments resulted in an increase of $2,344 in previously reported
cost of products sold and a $967 increase in selling, general and
administrative expenses. The related tax impact of these adjustments of
$1,200 has also been reflected. The impact of these adjustments reduced
net earnings by $2,111 and related earnings per diluted share by $0.02
from amounts previously reported for the first quarter 2000.
Certain Comparative and Pro Forma Financial Information
Comparative Per Share Data. The following table sets forth, for each of
the periods indicated, income per share from continuing operations and book
value per share separately for Tyson and IBP on a historical basis, for Tyson on
a historical pro forma combined basis and on a historical pro forma combined
basis per IBP equivalent share. The information in the table below should be
read in conjunction with the historical financial statements of the corporations
referred to in this Information Statement in the sections captioned "Selected
Financial Data" of each of Tyson and IBP.
We used an assumed exchange ratio of 2.381 and 1.948, the maximum and
minimum exchange ratio that could be applied in the Merger, in computing the
unaudited historical pro forma combined and unaudited equivalent pro forma
combined per share data.
The Tyson pro forma data was prepared by Tyson and derived by combining
the unaudited historical consolidated financial information of Tyson and IBP
using the purchase method of accounting for business combinations in accordance
with GAAP.
IBP's unaudited equivalent pro forma per share data shows the effect of
the Merger from the perspective of an owner of IBP Shares. The information was
computed by multiplying the Tyson/IBP historical pro forma information by the
assumed exchange ratio of 2.381 and 1.948, the high and low ends of the exchange
ratio in the Merger, and then multiplying the result by 49.9%, which represents
the percentage of total outstanding number of IBP Shares that will be converted
into Tyson Class A Common Stock. The remaining 50.1% of IBP Shares will be
purchased by Tyson for cash pursuant to the Offer or are already owned by Tyson.
The unaudited historical pro forma combined per share data may not be
indicative of the operating results or financial position that would have
occurred if the Merger had been consummated at the beginning of the periods
indicated, and may not be indicative of future operating results or financial
position.
19
The information in the table below should be read in conjunction with
the historical financial statements incorporated by reference in this
Information Statement in the sections captioned "Selected Financial Data" of
each of Tyson and IBP.
Tyson Historical Per Share (Twenty-six weeks ended and as of March 31, 2001)
Earnings per share
Basic ................................................................ $ 0.09
Diluted .............................................................. 0.09
Cash Dividends
Class A .............................................................. 0.080
Class B .............................................................. 0.072
Book Value .............................................................. 9.63
Tyson Historical Per Share (Fifty-two weeks ended and as of September 30, 2000)
Earnings per share
Basic ................................................................ $ 0.67
Diluted .............................................................. 0.67
Cash Dividends
Class A .............................................................. 0.160
Class B .............................................................. 0.144
Book Value .............................................................. 9.67
IBP Historical Per Share (Fifty-three weeks ended and as of December 30, 2000)
Earnings per share before accounting change and extraordinary loss
Basic ................................................................ $ 1.41
Diluted .............................................................. 1.40
Cash Dividends .......................................................... 0.10
Book Value .............................................................. 17.50
IBP Historical Per Share (Thirteen weeks ended and as of March 31, 2001)
Earnings per share before accounting change and extraordinary loss
Basic ................................................................ $ 0.19
Diluted .............................................................. $ 0.19
Cash Dividends .......................................................... $ 0.025
Book Value .............................................................. $ 17.59
Assumed Exchange
Ratio of
----------------
2.381 1.948
Tyson/IBP Historical Pro Forma Per Share (Twenty-six weeks ended and as of March
31, 2001)
Earnings per share before accounting change and extraordinary loss
Basic ................................................................... $ (0.04) $ (0.04)
Diluted ................................................................. (0.04) (0.04)
Cash Dividends
Class A ................................................................. 0.043 0.046
Class B ................................................................. 0.072 0.072
Book Value ................................................................. 9.54 10.22
Tyson/IBP Historical Pro Forma Per Share (Fifty-two weeks ended
and as of September 30, 2000)
Earnings per share before accounting change and extraordinary loss
Basic ................................................................... $ 0.99 $ 1.05
Diluted ................................................................. 0.98 1.05
Cash Dividends
Class A ................................................................. 0.085 0.091
20
Class B ................................................................. 0.144 0.144
Unaudited Equivalent Historical Pro Forma Per Share for IBP (Twenty-six weeks
ended and as of March 31, 2001)
Earnings per share before accounting change and extraordinary loss
Basic ................................................................... $ (0.05) $ (0.04)
Diluted ................................................................. (0.05) (0.04)
Cash Dividends ............................................................. 0.051 0.045
Book Value ................................................................. 11.33 9.93
Unaudited Equivalent Historical Pro Forma Per Share for IBP (Fifty-two weeks ended
September 30, 2000)
Earnings per share before accounting change and extraordinary loss
Basic ................................................................... $1.17 $1.02
Diluted ................................................................. 1.16 1.02
Cash Dividends ............................................................. 0.101 0.088
Pro Forma Financial Information. The following Unaudited Pro Forma
Combined Condensed Balance Sheet at March 31, 2001 (the "Pro Forma Balance
Sheet") and the Unaudited Pro Forma Combined Condensed Statement of Income for
the fiscal year ended September 30, 2000 and the Unaudited Pro Forma Combined
Condensed Statement of Income for the six months ended March 31, 2001 (the "Pro
Forma Income Statements" and, together with the Pro Forma Balance Sheet, the
"Pro Forma Financial Statements") are presented using the purchase method of
accounting to give effect to the Merger and reflect the combination of
consolidated historical financial data of IBP and Tyson.
The Pro Forma Balance Sheet is derived from the unaudited financial
statements of Tyson contained in Tyson's Quarterly Report on Form 10-Q for the
six months ended March 31, 2001 (the "Tyson 10-Q") and the unaudited financial
statements of IBP contained in IBP's Quarterly Report on Form 10-Q for the 13
weeks ended March 31, 2001 (the "IBP 10-Q") and is presented as if the Merger
had occurred on March 31, 2001. The Unaudited Pro Forma Combined Condensed
Income Statement for the fiscal year ended September 30, 2000 has been derived
from the audited financial statements of Tyson contained in the Tyson 10--K and
the unaudited financial statements of IBP contained in IBP 's restated
historical financial statements contained in IBP's Annual Report on Form 8--K,
dated November 3, 2000, as amended, and IBP's restated historical unaudited
financial statements contained in IBP's Quarterly Reports on Form 10-Q, as
amended (the "IBP Restated 10-Qs"), and is presented as if the Merger had
occurred on October 3, 1999. The Unaudited Pro Forma Combined Condensed Income
Statement for the six months ended March 31, 2001 has been derived from the
unaudited financial statements of Tyson contained in the Tyson 10- Q and the
unaudited financial statements and information of IBP contained in IBP's Annual
Report on Form 10-K for the fiscal year ended December 30, 2000 and in IBP's
10-Q and IBP's Restated 10-Qs.
The pro forma adjustments reflected in the Pro Forma Financial
Statements represent estimated values and amounts based on available information
regarding IBP's assets and liabilities. The actual adjustments that will result
from the Merger will be based on further evaluations and may differ
substantially from the adjustments presented herein. The Pro Forma Financial
Statements are presented for illustrative purposes only and are not necessarily
indicative of the financial position or operating results that would have been
achieved had the Merger been consummated as of the dates indicated or of the
results that may be obtained in the future.
The Pro Forma Financial Statements should be read in conjunction with
the accompanying notes and the historical financial statements of the
corporations incorporated by reference or referred to in this Information
Statement in the sections captioned "Selected Financial Data" of each of Tyson
and IBP.
21
TYSON FOODS, INC.
Unaudited Pro Forma Combined Condensed Balance Sheet
March 31, 2001
(in millions of dollars)
(a) (b) (c) (a)+(b)+(c)
Pro Forma
Tyson ---------------------------
Foods, Inc. IBP, inc. Adjustments Combined
----------- --------- ------------- -----------
ASSETS
Current Assets:
Cash and cash equivalents...................... $ 83.5 $ 14.7 $ -- $ 98.2
Accounts receivable............................ 502.5 644.3 -- 1,146.8
Inventories.................................... 958.5 943.3 -- 1,901.8
Other currrent assets.......................... 58.6 94.0 -- 152.6
-------- -------- --------- ---------
Total current assets.......................... 1,603.1 1,696.3 -- 3,299.4
-------- -------- --------- ---------
Net property, plant and equipment.............. 2,092.3 1,681.5 -- 3,773.8
Excess of investments over net assets acquired. 921.6 -- 2,001.2(1) 2,922.8
Identifiable intangibles....................... -- -- 25.0(1) 25.0
Goodwill....................................... -- 954.0 (954.0)(1) --
Other assets................................... 254.0 178.5 (12.9)(6) 356.1
(67.0)(7)
3.5(8)
-------- -------- --------- ---------
Total assets.................................. $4,871.0 $4,510.3 $ 995.8 $10,377.1
======== ======== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY.............
Current Liabilities:...........................
Notes payable.................................. $ 81.8 $1,012.0 $ -- $ 1,093.8
Current portion of long-term debt.............. 73.1 5.3 -- 78.4
Trade accounts payable......................... 327.4 404.3 -- 731.7
Other accrued liabilities...................... 387.6 356.4 -- 744.0
-------- -------- --------- ---------
Total current liabilities...................... 869.9 1,778.0 -- 2,647.9
-------- -------- --------- ---------
Long-term debt................................. 1,447.6 687.7 1,676.1(2) 3,811.4
Deferred income taxes.......................... 366.7 179.5 -- 546.2
Other liabilities.............................. 48.1 -- -- 48.1
Shareholders'Equity:
Class A common stock........................... 13.8 5.5 (5.5)(3) 26.4
12.6(4)
Class B common stock........................... 10.3 -- -- 10.3
Capital in excess of par value................. 734.6 443.6 (443.6)(3) 1,903.3
1,152.5(4)
16.2(5)
Retained earnings.............................. 1,719.6 1,497.6 (1,497.6)(3) 1,719.6
Accumulated other comprehensive income......... (17.6) (19.7) 19.7(3) (14.1)
3.5(8)
-------- -------- --------- ---------
2,460.7 1,927.0 (742.2) 3,645.5
Treasury stock................................. 314.6 61.9 (61.9)(3) 314.6
Unamortized deferred compensation.............. 7.4 -- -- 7.4
-------- -------- --------- ---------
Total shareholders' equity....................... 2,138.7 1,865.1 (680.3) 3,323.5
-------- -------- --------- ---------
Total liabilities and shareholders' equity....... $4,871.0 $4,510.3 $ 995.8 $10,377.1
======== ======== ========= =========
See accompanying notes.
22
TYSON FOODS, INC.
Unaudited Pro Forma Combined Condensed Statement of Income
Fiscal Year Ended September 30, 2000
(in millions of dollars, except per share amounts)
(a) (b) (c) (a)+(b)+(c)
Pro Forma
Tyson ------------------------
Foods, Inc. IBP, Inc. Adjustments Combined
----------- --------- ----------- -----------
Sales.................................................................. $7,157.8 $16,674.7 $ -- $23,832.5
Cost of Sales.......................................................... 6,043.4 15,630.6 -- 21,674.0
-------- --------- ------ ---------
1,114.4 1,044.1 -- 2,158.5
Expenses:..............................................................
Selling, general administrative...................................... 765.9 552.0 1.7(1) 1,285.6
(34.0)(2)
Other................................................................ -- 31.3 -- 31.3
-------- --------- ------ ---------
Operating income....................................................... 348.5 460.8 32.3 841.6
Other expenses:........................................................
Interest............................................................. 115.0 83.2 117.3(3) 315.5
Other................................................................ (1.2) -- -- (1.2)
-------- --------- ------ ---------
Income before taxes on income, accounting change and extraordinary loss 234.7 377.6 (85.0) 477.3
Provision for income taxes............................................. 83.5 142.1 (44.6)(5) 181.0
Minority interest...................................................... -- -- -- --
-------- --------- ------ ---------
Net income before accounting change and extraordinary loss............. $ 151.2 $ 235.5 $(40.4) $ 346.3
======== ========= ====== =========
Weighted average shares outstanding:...................................
Basic................................................................ 225.0 103.6 351.5
Diluted.............................................................. 226.0 107.1 354.7
Earnings per share before accounting change and extraordinary loss:....
Basic................................................................ $ 0.67 $ 2.24 $ 0.99
Diluted.............................................................. $ 0.67 $ 2.17 $ 0.98
See accompanying notes.
23
TYSON FOODS, INC.
Unaudited Pro Forma Combined Condensed Statement of Income
Six Months Ended March 31, 2001
(in millions of dollars, except per share amounts)
(a) (b) (c) (a)+(b)+(c)
Pro Forma
Tyson ------------------------
Foods, Inc. IBP, Inc. Adjustments Combined
----------- --------- ----------- -----------
Sales.................................................. $3,570.8 $8,537.6 $ -- $12,108.4
Cost of Sales.......................................... 3,093.7 8,099.7 -- 11,193.4
-------- -------- ------ ---------
477.1 437.9 -- 915.0
Expenses:
Selling, general and administrative................. 386.0 360.1 0.8(1) 729.9
(17.0)(2)
Other............................................... -- (6.9) -- (6.9)
-------- -------- ------ ---------
Operating income....................................... 91.1 84.7 16.2 192.0
Other expenses:
Interest............................................ 55.3 50.2 58.7(3) 164.2
Other............................................... 5.0 -- -- 5.0
-------- -------- ------ ---------
Income before taxes on income, accounting change
and extraordinary loss............................... 30.8 34.5 (42.5) 22.8
Provision for income taxes............................. 10.7 20.8 (22.3) 9.2
Minority interest...................................... (0.8) -- -- 0.8
-------- -------- ------ ---------
Net income before accounting change and
extraordinary loss................................... $ 20.9 $ 13.7 $(20.2) $ 14.4
======== ======== ====== =========
Weighted average shares outstanding:
Basic............................................... 222.2 105.8 348.2
Diluted............................................. 222.6 107.1 351.3
Earnings per share before accounting change and
extraordinary item:
Basic............................................... $ 0.09 $ 0.13 $ 0.04
Diluted............................................. $ 0.09 $ 0.13 $ 0.04
See accompanying notes.
24
Notes to Unaudited Pro Forma Combined Condensed Balance Sheet
The following adjustments are based upon Tyson's preliminary purchase price
allocation as further described below.
(1) To record the excess of purchase price over net assets acquired as
follows (in millions):
Purchase consideration:
Cash paid for 50.1% of outstanding IBP Shares (52,538,317 shares at $30).. $1,576.1
1,165.1
Tyson Class A Common Stock issued for 49.9% of the
outstanding IBP Shares based
upon an average trading price of $12.60, which is the lower end of the
range of $12.60 to $15.40 of Tyson's average trading price of Tyson
Class A Common Stock set forth in the Merger Agreement (52,900,490 x
2.381 at $9.25, average closing price for Tyson Class A Common Stock
for the six days subsequent to the Stipulation
Order)
Estimated acquisition expenses ................................................ 167.0
IBP stock options converted to Tyson stock options ............................ 16.2
IBP stock currently owned by Tyson ............................................ 12.9
--------
Total acquisition consideration .......................................... $2,937.3
========
Total purchase price .......................................................... $2,937.3
Less:
Book value of IBP's net assets acquired .............................. $1,865.1
To eliminate IBP's goodwill ................................................. (954.0)
--------
Estimated fair value of the assets of IBP acquired less liabilities assumed
(a), (b) and (c) ......................................................... (911.1)
Identifiable intangible assets (a) and (b) .................................... (25.0)
--------
Excess of purchase price over net assets acquired ............................. $2,001.2
========
(a) Based upon currently available information Tyson has assumed for
purposes of these Unaudited Pro Forma Financial Statements that the
book value of IBP's tangible assets and liabilities approximate their
fair value. Tyson is in the process of performing a detailed analysis
and outside appraisal of the fair values of the assets of IBP acquired
and liabilities assumed. Based upon this detailed analysis, which has
not yet been completed, the allocation of the excess purchase price
over the book value of IBP may be further refined. This may result in a
portion of the purchase price being further allocated to property,
plant and equipment and other identifiable intangible assets with the
remainder, representing excess of investments over net assets acquired,
constituting goodwill. Tyson anticipates completing this detailed
analysis and finalizing the purchase price allocation in fiscal 2002.
On June 29, 2001, the Financial Accounting Standards Board ("FASB")
approved the final standards resulting from its deliberations on the
business combinations project and issued Financial Accounting Standards
No. 141, Business Combinations, No. 142, Goodwill and Other Intangible
Assets, in the latter half of July.
Statement 141, which includes the criteria for the recognition of
intangible assets separately from goodwill, is effective for any
business combination accounted for by the purchase method that is
completed after June 30, 2001. Statement 142, which includes the
requirements to test goodwill and indefinite lived intangible assets
for impairment rather than amortize them, will be effective for fiscal
years beginning after December 15, 2001 with early adoption permitted
for companies with fiscal years beginning after March 15, 2001,
provided they have not yet issued their first quarter financial
statements. In all cases, Statement 142 must be adopted as of the
beginning of a fiscal year. The pro forma adjustments do not include
any goodwill amortization.
25
(b) Based upon information from IBP, this amount represents identifiable
assets, primarily registered trademarks, which will be amortized on a
straight line basis over their estimated useful lives of fifteen years.
(c) Tyson will perform a detailed analysis and measurement o the fair
values of assets and liabilities assumed. Tyson anticipates completing
this analysis in fiscal 2002. This may result in additional excess of
investments over net assets acquired, i.e. goodwill.
(2) To reflect incremental additional debt required to finance the
acquisition. The amounts reflect the additional borrowings that will be
required to purchase the IBP Shares for cash of $1,576 million plus
estimated remaining unfunded acquisition costs of $100 million. A
portion of IBP's debt may be retired and replaced with new debt.
(3) To eliminate IBP's stockholders' equity balances.
(4) To reflect the incremental shares of Tyson Class A Common Stock to be
issued for the acquisition based upon the maximum exchange ratio in the
Merger Agreement of 2.381.
(5) To record the fair market value of IBP's stock options converted to
Tyson stock options.
(6) To reclassify shares of IBP's stock currently owned by Tyson.
(7) To reclassify termination and other fees paid.
(8) To reclassify unrealized loss on IBP's shares currently owned by Tyson
in order to reflect historical cost in the purchase price.
Notes To Unaudited Pro Forma Combined Condensed Statements Of Income
The following adjustments are based upon Tyson's preliminary purchase price
allocation as further described below.
(1) To reflect amortization of identifiable intangibles associated with the
acquisition over fifteen years.
(2) To reverse IBP's amortization on existing goodwill.
(3) To reflect increased interest expense resulting from the acquisition
debt of $1,676 million based on an assumed interest rate of 7%
representing Tyson's expected incremental interest rate for debt
related to the acquisition. The effect of a 1/8% change in the interest
rate is equal to approximately $2.1 million in additional interest
expense.
(4) To reflect the net tax benefit resulting from the additional interest
expense at Tyson's statutory tax rates of 38%.
(5) The following schedule conforms IBP's most recent fiscal year to
Tyson's fiscal year ended September 30, 2000 (in millions):
26
(b) (c)
(a) Restated Restated (a)-(b)+(c)
Restated Unaudited Unaudited Unaudited
52 Weeks 39 Weeks 39 Weeks 52 Weeks
Ended Ended Ended Ended
12/25/1999 9/25/1999 9/23/2000 9/30/2000
---------- --------- --------- ---------
Sales ................................... $15,121.8 $10,985.8 $12,538.7 $16,674.7
Cost of sales ........................... 14,126.7 10,260.6 11,764.5 15,630.6
--------- --------- --------- ---------
995.1 725.2 774.2 1,044.1
Expenses:
Selling, general and administrative .... 440.5 310.9 422.4 552.0
Other expense .......................... -- -- 31.3 31.3
--------- --------- --------- ---------
Operating income ........................ 554.6 414.3 320.5 460.8
Interest expense, net ................... 67.8 48.7 64.1 83.2
--------- --------- --------- ---------
Income before taxes on income, accounting
change and extraordinary loss ........... 486.8 365.6 256.4 377.6
Provision for income taxes .............. 168.9 124.3 97.5 142.1
--------- --------- --------- ---------
Earnings before accounting change and
extraordinary loss ...................... $ 317.9 $ 241.3 $ 158.9 $ 235.5
========= ========= ========= =========
(7) The following schedule conforms IBP's most recent interi period to
Tyson's twenty-six weeks ended March 31, 2001 (in millions):
(b)
Restated (c) (a)-(b)+(c)
(a) Unaudited Unaudited Unaudited 6
53 Weeks 39 Weeks 13 Weeks Months
Ended Ended Ended Ended
12/30/2000 9/23/2000 3/31/2001 3/31/2001
---------- --------- --------- ---------
Sales ................................... $16,949.8 $12,538.7 $ 4,126.5 $ 8,537.6
Cost of sales ........................... 15,913.3 11,764.5 3,950.9 8,099.7
--------- --------- --------- ---------
1,036.5 774.2 175.6 437.9
Expenses:
Selling, general and administrative .... 658.2 422.4 124.3 360.1
Other expense (Income) ................. 31.3 31.3 (6.9) (6.9)
--------- --------- --------- ---------
Operating income ........................ 347.0 320.5 58.2 84.7
Interest expense, net ................... 88.3 64.1 26.0 50.2
--------- --------- --------- ---------
Income before taxes on income, accounting
change and extraordinary loss ........... 258.7 256.4 32.2 34.5
Provisions for income taxes ............. 106.0 97.5 12.3 20.8
--------- --------- --------- ---------
Earnings before accounting change and
extraordinary loss ...................... $ 152.7 $ 158.9 $ 19.9 $ 13.7
========= ========= ========= =========
27
THE MERGER AGREEMENT, STIPULATION AND VOTING AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement (as originally executed by Tyson, Purchaser and IBP on January 1,
2001), the Stipulation (which modified the Merger Agreement) and the voting
agreement (as originally executed by IBP and the Tyson Limited Partnership (the
"Partnership") on January 1, 2001, the "Voting Agreement"), copies of which are
filed as exhibits to the Schedule TO. This summary is qualified in its entirety
by reference to the complete text of the Merger Agreement, the Stipulation and
the Voting Agreement.
The Merger Agreement
The Merger Agreement provided for the making of the Offer. Purchaser's
obligation to accept for payment and pay for IBP Shares tendered pursuant to the
Offer was subject to the satisfaction or waiver of the Minimum Condition and
certain other conditions that are described below. Subject to the provisions of
the Merger Agreement, Purchaser could waive, in whole or in part at any time or
from time to time prior to the Expiration Date (as defined in the Merger
Agreement), any condition to the Offer; provided that without the prior written
consent of IBP, Purchaser could not make any change that changed the form of
consideration to be paid in the Offer or the Merger, decreased the price per IBP
Share, increased the Minimum Condition or the Maximum Amount (as defined in the
Merger Agreement), imposed additional conditions to the Offer or amended any
term or any condition to the Offer in a manner materially adverse to the holders
of IBP Shares.
Under the Merger Agreement, Purchaser would have had the right, without
the consent of IBP, to extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff of the SEC
applicable to the Offer or any period required by applicable law. Unless the
Merger Agreement had been terminated, Purchaser was required to extend the Offer
from time to time in the event that, at a then-scheduled expiration date, all of
the conditions to the Offer had not been satisfied or waived as permitted
pursuant to the Merger Agreement, each such extension not to exceed (unless
otherwise consented to in writing by IBP) the lesser of 10 additional business
days or such fewer number of days that Purchaser reasonably believed were
necessary to cause the conditions to the Offer to be satisfied. Except as
provided in the Merger Agreement, Purchaser was obligated not to terminate the
Offer without purchasing IBP Shares pursuant to the Offer.
As promptly as practicable after the date of the Merger Agreement,
Tyson was required to cause Purchaser to, and Purchaser was required to,
commence the Exchange Offer pursuant to which Purchaser would offer to issue, in
exchange for each then issued and outstanding IBP Share, other than IBP Shares
then owned by Tyson or Purchaser, a number of duly authorized, validly issued,
fully paid and non-assessable shares of Tyson Class A Common Stock equal to (a)
if the market price per share of Tyson Class A Common Stock was equal to or
greater than $15.40, 1.948, (b) if the market price per share of Tyson Class A
Common Stock was less than $15.40 and greater than $12.60, the result of $30.00
divided by the market price per share of Tyson Class A Common Stock, or (c) if
the market price per share of Tyson Class A Common Stock was equal to or less
than $12.60, 2.381. The "market price" per share of Tyson Class A Common Stock
is the average of the closing price per share of Tyson Class A Common Stock on
the NYSE at the end of the regular session as reported on the Consolidated Tape,
Network A for the fifteen consecutive trading days ending on the second trading
day immediately preceding the expiration date of the Exchange Offer. The
obligation of Purchaser to consummate the Exchange Offer and to issue shares of
Tyson Class A Common Stock in exchange for IBP Shares tendered pursuant to the
Exchange Offer would be subject only to Purchaser having accepted for payment,
and paid for, IBP Shares tendered pursuant to the Offer and certain other
conditions.
The Merger
Under the terms of the Merger Agreement, as soon as practicable after
the purchase of the IBP Shares pursuant to the Offer, the Exchange Offer, the
approval of the Merger Agreement by IBP's stockholders, if required, and the
satisfaction or waiver of the other conditions to the Merger, IBP would be
merged with and into Purchaser, and Purchaser will be the surviving corporation
(the "Surviving Corporation").
28
Each IBP Share outstanding at the Effective Time (other than IBP Shares
owned by Tyson or any of its subsidiaries, including Purchaser, or by IBP as
treasury stock, all of which will be cancelled), would be converted into the
right to receive that number of shares of Tyson Class A Common Stock equal to
(a) if the market price per share of Tyson Class A Common Stock was equal to or
greater than $15.40, 1.948, (b) if the market price per share of Tyson Class A
Common Stock was less than $15.40 and greater than $12.60, the result of $30.00
divided by the market price per share of Tyson Class A Common Stock, and (c) if
the market price per share of Tyson Class A Common Stock was equal to or less
than $12.60, 2.381. The "market price" per share of Tyson Class A Common Stock
is the average of the closing price per share of Tyson Class A Common Stock on
the NYSE at the end of the regular session as reported on the Consolidated Tape,
Network A for the fifteen consecutive trading days ending on the fifth trading
day immediately preceding the Effective Time.
Under the terms of the Merger Agreement, in the event that at February
28, 2001, the Minimum Condition had not been satisfied, Purchaser would
terminate the Offer and the Exchange Offer and Tyson, Purchaser and IBP would
complete the Merger for consideration including both cash and Tyson Class A
Common Stock (the "Cash Election Merger"). In the Cash Election Merger, each
holder of IBP Shares would have the right to elect to receive either $30.00 cash
("Cash Consideration") for each IBP Share or a number of shares of Tyson Class A
Common Stock ("Stock Consideration") equal to, (a) if the market price per share
of Tyson Class A Common Stock was equal to or greater than $15.40, 1.948, (b) if
the market price per share of Tyson Class A Common Stock was less than $15.40
and greater than $12.60, the result of $30.00 divided by the market price per
share of Tyson Class A Common Stock, or (c) if the market price per share of
Tyson Class A Common Stock was equal to or less than $12.60, 2.381. The "market
price" per share of Tyson Class A Common Stock is the average of the closing
price per share of Tyson Class A Common Stock on the NYSE at the end of the
regular session as reported on the Consolidated Tape, Network A for the fifteen
consecutive trading days ending on the fifth trading day immediately preceding
the effective time of the Cash Election Merger. The maximum number of IBP Shares
for which Cash Consideration would be paid would be limited to a number of the
outstanding IBP Shares which, together with IBP Shares owned by Tyson and any
IBP Shares the holders of which elected to pursue appraisal rights under the
General Corporation Law of the State of Delaware, equals 50.1% of the
outstanding IBP Shares. If the number of IBP Shares the holders of which elected
Cash Consideration, together with IBP Shares owned by Tyson and any IBP Shares
the holders of which elect to pursue appraisal rights under Delaware law,
exceeded 50.1% of the outstanding IBP Shares, such holders would receive cash
for a pro rata portion of their IBP Shares and the remaining IBP Shares would
receive Stock Consideration. The maximum number of IBP Shares for which Stock
Consideration would be paid would be limited to 49.9% of the outstanding IBP
Shares. If the number of IBP Shares the holders of which elected Stock
Consideration exceeded 49.9% of the outstanding IBP Shares, such holders would
receive Tyson Class A Common Stock for a pro rata portion of their IBP Shares
and the remaining IBP Shares would receive Cash Consideration.
Employee Stock Options
At or immediately prior to the Effective Time, (1) each employee stock
option or director stock option to purchase outstanding IBP Shares under any
stock option plan of IBP, whether or not vested or exercisable (each, an "IBP
Option") would, by virtue of the Merger and without any further action on the
part of any holder thereof, be assumed by Tyson and deemed to constitute a Tyson
Option to acquire, on the same terms and conditions as were applicable under
such IBP Option, the same number of shares of Tyson Class A Common Stock as the
holder of such IBP Option would have been entitled to receive had such holder
exercised such IBP Option in full immediately prior to the Effective Time
(rounded to the nearest whole number), at a price per share (rounded down to the
nearest whole cent) equal to (x) the aggregate exercise price for the IBP Shares
otherwise purchasable pursuant to such IBP Option divided by (y) the number of
whole shares of Tyson Class A Common Stock purchasable pursuant to the Tyson
Option in accordance with the foregoing and (2) Tyson shall assume the
obligations of IBP under the stock option plans of IBP, each of which will
continue in effect after the Effective Time, and all references to IBP in such
plans, and any option granted thereunder, will be deemed to refer to Tyson,
where appropriate. The other terms of each such IBP Option, and the plans under
which they were issued, will continue to apply in accordance with their terms.
29
Under the Merger Agreement, prior to the Effective Time, IBP would use
its best reasonable efforts to (i) obtain any consents from holders of IBP
Options and (ii) make any amendments to the terms of such stock option plans of
IBP that, in the case of either clauses (i) or (ii), were necessary or
appropriate to give effect to the above transactions; provided, however, that
lack of consent of any holder of an IBP Option would in no way affect the
obligations of the parties to consummate the Merger.
In the Merger Agreement, Tyson agreed to take, at or prior to the
Effective Time, all corporate action necessary to reserve for issuance a
sufficient number of shares of Tyson Class A Common Stock for delivery upon
exercise of the Tyson Options. The Merger Agreement provided that Tyson would
file a registration statement on Form S-8, with respect to the shares of Tyson
Class A Common Stock subject to such Tyson Options and would use commercially
reasonable efforts to maintain the effectiveness of such registration statement
(and maintain the current status of the prospectus or prospectuses contained
therein) for so long as such Tyson Options remain outstanding. With respect to
those individuals who subsequent to the Merger would be subject to the reporting
requirements under Section 16(a) of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), Tyson would administer the IBP stock option plans
in a manner consistent with the exemptions provided by Rule 16(b)(3) promulgated
under the Exchange Act.
Representations and Warranties
Pursuant to the Merger Agreement, Tyson and IBP made customary
representations and warranties to the other.
Covenants of IBP
Pursuant to the Merger Agreement, IBP agreed to comply with various
covenants.
Conduct of IBP. Prior to the date that Tyson's designees constitute a
majority of the IBP Board, except as expressly permitted by the Merger
Agreement, IBP and its subsidiaries would conduct business in the ordinary
course consistent with past practices.
Other Offers. Neither IBP nor any of its subsidiaries would, or would
authorize or permit any of their officers, directors, employees, investment
bankers, attorneys, accountants, consultants or other agents or advisors to,
directly or indirectly, (x) solicit, initiate or take any action to facilitate
or encourage the submission of inquiries, proposals or offers from any person or
group (other than Tyson and Purchaser) relating to any Acquisition Proposal
(defined below), or agree to or endorse any Acquisition Proposal, (y) enter into
or participate in any discussions or negotiations regarding any Acquisition
Proposal, or furnish to any person or group any information with respect to its
business, properties or assets in connection with any Acquisition Proposal or
(z) grant any waiver or release under any standstill or similar agreement with
respect to any class of equity securities of IBP or any of its subsidiaries.
"Acquisition Proposal" means any offer or proposal for a merger, reorganization,
consolidation, share exchange, business combination or other similar transaction
involving IBP or any of its subsidiaries or any proposal or offer to acquire,
directly or indirectly, securities representing more than 50% of the voting
power of IBP, or a substantial portion of the assets of IBP and its subsidiaries
taken as a whole, other than the Offer and the Merger contemplated by the Merger
Agreement.
Notwithstanding the foregoing, the IBP Board could, prior to the
acceptance for payment of the IBP Shares pursuant to the Offer, (i) furnish
information pursuant to a confidentiality letter deemed appropriate by the
Special Committee concerning IBP and its businesses, properties or assets to a
person or group who in the judgment of the Special Committee has made a bona
fide Acquisition Proposal, (ii) engage in discussions or negotiations with such
a person or group who in the judgment of the Special Committee has made a bona
fide Acquisition Proposal, (iii) following receipt of a bona fide Acquisition
Proposal, take and disclose to its stockholders a position contemplated by Rule
14e-2(a) under the Exchange Act or otherwise make disclosure to its
stockholders, (iv) following receipt of an Acquisition Proposal, fail to make or
withdraw or modify its recommendation that all
30
stockholders of IBP who wish to receive cash for their IBP Shares tender their
IBP Shares in the Offer and approve the Merger and/or (v) take any
non-appealable, final action ordered to be taken by IBP by any court of
competent jurisdiction but, in each case referred to in the foregoing (i), (ii)
and (iv), only if (i) IBP had complied with the terms of this "No Solicitation
Covenant," (ii) IBP had received an unsolicited Acquisition Proposal which the
Special Committee determined in good faith was reasonably likely to result in a
Superior Proposal, and (iii) IBP delivered to Tyson a prior written notice
advising Tyson that it intended to take such action. "Superior Proposal" means
any bona fide written Acquisition Proposal which (i) the Special Committee
determined in good faith (after consultation with a financial advisor of
nationally recognized reputation and taking into account all the terms and
conditions of the Acquisition Proposal) was (a) more favorable to IBP and its
stockholders from a financial point of view than the transaction contemplated
under the Merger Agreement, and (b) reasonably capable of being completed,
including a conclusion that its financing, to the extent required, is then
committed or is in the good-faith judgment of the IBP Board, reasonably capable
of being financed by the person making such Acquisition Proposal.
Covenants of Tyson
Pursuant to the Merger Agreement, Tyson agreed to comply with various
covenants.
Director and Officer Liability. For six years after the Effective Time,
Tyson would cause the Surviving Corporation to indemnify and hold harmless the
present and former officers and directors of IBP in respect of acts or omissions
occurring prior to the Effective Time to the extent provided under IBP's
articles of incorporation and bylaws in effect on the date of the Merger
Agreement; subject to any limitation imposed from time to time under applicable
law. In addition, for six years after the Effective Time, Tyson would cause the
Surviving Corporation to use its best efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering each such officer and director currently covered
by the IBP's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date of the Merger Agreement, provided that if the aggregate
annual premiums for such insurance at any time during such period should exceed
200% of the per annum rate of premium paid by IBP in its last full fiscal year
for such insurance, then Tyson would cause the Surviving Corporation to provide
only such coverage as would then be available at an annual premium equal to 200%
of such rate.
Employee Matters. Tyson agreed that, subject to applicable law, the
Surviving Corporation and its subsidiaries would provide benefits to their
employees which would, in the aggregate, be comparable to those currently
provided by Tyson and its subsidiaries to their employees; provided, however,
that this provision would not apply to any employees represented for purposes of
collective bargaining.
Stock Exchange Listing. Tyson agreed to use its reasonable best efforts
to cause the shares of Tyson Class A Common Stock to be issued in connection
with the Exchange Offer and the Merger to be listed on the NYSE, subject to
official notice of issuance.
Acquisitions of IBP Shares. Tyson and Purchaser would not acquire any
IBP Shares prior to the Effective Time or the termination of the Merger
Agreement, other than IBP Shares purchased pursuant to the Offer or the Exchange
Offer.
Mutual Covenants of Tyson and IBP
Pursuant to the Merger Agreement, Tyson and IBP agreed to comply with
various mutual covenants.
IBP Proxy Statement and Merger Form S-4. If Purchaser did not own at
least 90% of the issued and outstanding IBP Shares following consummation of the
Offer and the Exchange Offer, the Merger Agreement as originally executed on
January 1, 2001 provided that IBP would promptly prepare its proxy statement
(the "IBP
31
Proxy Statement") for soliciting proxies to vote at the special meeting of
stockholders called to vote on the Merger Agreement and the Merger.
Certain Regulatory Issues. Each party would use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by the Merger Agreement.
Each party would refrain from taking, directly or indirectly, any action
contrary to or inconsistent with the provisions of the Merger Agreement,
including action which would interfere with the Offer or impair such party's
ability to consummate the Merger. The Merger Agreement provides that IBP and the
IBP Board would use their reasonable best efforts to (a) take all action
necessary so that no state takeover statute or similar statute or regulation was
or would become applicable to the Offer, the Exchange Offer, the Merger or any
of the other transactions contemplated by the Merger Agreement and (b) if any
state takeover statute or similar statute or regulation became applicable to any
of the foregoing, take all action necessary so that the Offer, the Exchange
Offer, the Merger and the other transactions contemplated by the Merger
Agreement might be consummated as promptly as practicable on the terms
contemplated by the Merger Agreement and otherwise to minimize the effect of
such statute or regulation on the Offer, the Exchange Offer and the Merger.
Tyson would take such actions as might be necessary to eliminate any impediment
under any antitrust, competition or trade regulation laws that might be asserted
by any governmental entity with respect to the Offer, the Exchange Offer or the
Merger so as to enable the Offer, the Exchange Offer and the Merger to occur as
soon as reasonably practicable. Without limiting the generality of the
foregoing, Tyson would agree to divest, hold separate, or agree to any conduct
restrictions with respect to any Tyson or IBP assets or may be required by any
governmental entity in order to forego that governmental entity bringing any
action to enjoin the Offer, the Exchange Offer or the Merger.
Public Announcements. Each of Tyson and IBP would consult with each
other before issuing any press release or making any public statement with
respect to the Merger Agreement and not issue any such press release or make any
such public statement prior to such consultation.
Conditions to the Merger
The obligations of IBP, Tyson and Purchaser to consummate the Merger
would be subject to the satisfaction or, to the extent permitted by law, waiver
of the following conditions:
(a) the Merger Agreement having been approved and adopted by
the stockholders of IBP in accordance with Delaware law;
(b) any applicable waiting period under the HSR Act relating
to the Offer and the Merger having expired or been terminated;
(c) no provision of any applicable law or regulation and no
judgment, injunction, order or decree prohibiting the consummation of
the Merger;
(d) the Merger Form S-4 having been declared effective, no
stop order suspending the effectiveness of the Merger Form S-4 being in
effect and no proceedings for such purpose will be pending before the
SEC; and
(e) the shares of Tyson Class A Common Stock to be issued in
the Exchange Offer and the Merger have been approved for listing on the
NYSE, subject to official notice of issuance.
The obligation of IBP to consummate the Merger would also be subject to
the condition that the Purchaser had purchased the IBP Shares representing,
together with IBP Shares previously owned by Tyson, no less than 50.1% of the
issued and outstanding IBP Shares.
32
Termination
The Merger Agreement could be terminated and the Merger could be
abandoned at any time prior to the Effective Time (notwithstanding any approval
of the Merger Agreement by the stockholders of IBP):
(a) by mutual written agreement of IBP and Tyson;
(b) (i) by IBP, if the Offer had not been consummated by
February 28, 2001, provided that IBP was not then in breach in any
material respect of any of its obligations under the Merger Agreement;
or (ii) by either IBP or Tyson (but in case of Tyson, only if no IBP
Shares were purchased by Purchaser pursuant to the Offer or the
Exchange Offer) if the Merger had not been consummated by May 31, 2001,
provided that the party seeking to exercise such right was not then in
breach in any material respect of any of its obligations under the
Merger Agreement;
(c) by either IBP or Tyson if there was any law or regulation
that made acceptance for payment of, and payment for, the IBP Shares
pursuant to the Offer, or consummation of the Merger illegal or
otherwise prohibited or any judgment, injunction, order or decree of
any court or governmental body having competent jurisdiction
permanently enjoining Purchaser from accepting for payment of, and
paying for, the IBP Shares pursuant to the Offer or Purchaser, IBP or
Tyson from consummating the Merger and such judgment, injunction, order
or decree having become final and nonappealable;
(d) by Tyson, prior to the purchase of the IBP Shares pursuant
to the Offer, (i) if the IBP Board had withdrawn, or modified or
amended in a manner adverse to Tyson, its approval or recommendation of
the Merger Agreement, the Offer, the Exchange Offer or the Merger or
its recommendation that stockholders of IBP tender their IBP Shares
pursuant to the Offer and the Exchange Offer, adopt and approve the
Merger Agreement and the Merger or approved, recommended or endorsed
any proposal for a transaction other than the transactions hereunder
(including a tender or exchange offer for IBP Shares) or (ii) if IBP
failed to call the IBP stockholder meeting or failed to mail the IBP
Proxy Statement to its stockholders within 20 days after the Merger
Form S-4 was declared effective by the SEC or failed to include in such
statement the recommendation referred to above;
(e) by IBP, if (i) the IBP Board authorized IBP, subject to
complying with the terms of the Merger Agreement, to enter into a
binding written agreement concerning a transaction that constitutes a
Superior Proposal and IBP notified Tyson in writing at least three
business days prior to the proposed effectiveness of such termination
that it intended to enter into such an agreement, attaching a
description of the material terms and conditions thereof and permitted
Tyson, within such three business day period to submit a new offer,
which would be considered by the Special Committee in good faith (it
being understood that IBP would not enter into any such binding
agreement during such three-day period) and (ii) IBP prior to such
termination paying to Tyson in immediately available funds the
Termination Fee (defined below) and the fees required to be paid
pursuant to the Merger Agreement;
(f) by Tyson, if prior to the acceptance for payment of the
IBP Shares under the Offer, there had been a breach by IBP of any
representation, warranty, covenant or agreement contained in the Merger
Agreement that was not curable and such breach would give rise to a
failure of the condition to the Merger Agreement;
(g) by IBP, if prior to the acceptance for payment of the IBP
Shares under the Offer there had been a breach by Tyson of any
representation, warranty, covenant or agreement contained in the Merger
Agreement that was not curable and such breach would give rise to a
failure of the condition to the Offer (which shall be construed to
apply to Tyson); or
33
(h) by either IBP or Tyson if, at a duly held stockholders
meeting of IBP or any adjournment thereof at which the Merger Agreement
and the Merger were voted upon, the requisite stockholder adoption and
approval shall not have been obtained; provided, however, that Tyson
would not have the right to terminate the Merger Agreement or abandon
the transactions contemplated thereby if IBP Shares were purchased in
the Offer.
Fees and Expenses
Except as otherwise specified below, all fees and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
would be paid by the party incurring such expenses.
The Merger Agreement provided that if it was terminated under
circumstances which would constitute a Payment Event (as defined below), IBP
would pay to Tyson (i) if pursuant to clause (x) in the definition of "Payment
Event" below, simultaneously with the occurrence of such Payment Event or, if
pursuant to clause (y) in the definition of "Payment Event" below, within two
business days following such Payment Event, a fee of $15,000,000 (the
"Termination Fee") and (ii) a reimbursement payment of $66,500,000, in cash,
together with interest thereon, at a rate equal to the London Interbank Offered
Rate plus 0.75%, from January 2, 2001 to the date such payment was due pursuant
to the Merger Agreement (collectively, the "Reimbursement Payment"), reflecting
reimbursement of the amounts advanced by Tyson to IBP on January 2, 2001 and
used by IBP to pay the termination fee and the out- of-pocket fees and expenses
owed to Rawhide Holdings Corporation under the Rawhide Merger Agreement. The
advance was evidenced by a note that, in the event of termination of the Merger
Agreement, would be repaid only on the terms set forth in the Merger Agreement
with respect to the Reimbursement Payment, and that would survive the
consummation of the Merger if the Merger was completed. "Payment Event" means
(x) the termination of the Merger Agreement by IBP or Tyson pursuant to
subsection (d) or (e) under the section "Termination"; or (y) the termination of
the Merger Agreement pursuant to subsection (b), (f) or (h) under the section
"Termination", if at the time of such termination (or, in the case of a
termination pursuant to subsection (h) under the section "Termination," at the
time of the stockholders meeting), there shall have been outstanding an
Acquisition Proposal pursuant to which stockholders of IBP would receive cash,
securities or other consideration having an aggregate value in excess of $30.00,
and within six months of any such termination described in clause (y) above IBP
entered into a definitive agreement for or consummated such Acquisition Proposal
or another Acquisition Proposal with a higher value than such Acquisition
Proposal.
Upon the termination of the Merger Agreement under circumstances which
would constitute a Payment Event, IBP would reimburse Tyson and its affiliates
not later than two business days after demand delivered by Tyson to IBP, the
amount of $7,500,000 representing Tyson's fees and expenses (including, without
limitation, the fees and expenses of their counsel and investment banking fees)
and Tyson would not be required to submit documentation substantiating such fees
and expenses.
The Merger Agreement provided that Tyson would pay to IBP a fee of $70
million if the Merger Agreement was terminated (i) by Tyson or IBP pursuant to
subsection (c) of the section "Termination" or (ii) by IBP pursuant to
subsection (b) of the section "Termination" if the inability to close was
attributable to there being any law or order enacted or entered that imposed
material limitations on Tyson's ability to operate its business, own its assets,
accept IBP Shares for payment in the Offer or acquire IBP, provided, however,
that, in each case, such termination resulted from any action, suit, proceeding,
judgment, writ, injunction, order or decree with respect to any antitrust,
competition or trade regulation laws that might be asserted by any governmental
entity with respect to the Offer, the Exchange Offer or the Merger.
Amendments
At any time prior to the Effective Time, the Merger Agreement could be
amended by an instrument signed by Tyson, Purchaser and IBP. However, after
adoption of the Merger Agreement by the stockholders of IBP, the
34
Merger Agreement could not be amended by any amendment which by law required the
further approval of the stockholders of IBP unless the stockholders of IBP had
given their approval.
The Stipulation
The Stipulation provides that except as modified by the Stipulation,
the terms of the Merger Agreement remain in full force and effect. The
Stipulation modified the Merger Agreement as follows:
The Offer
The Stipulation provided for the making of the Offer. Purchaser's
obligation to accept for payment and pay for IBP Shares tendered pursuant to the
Offer was subject to the satisfaction, expiration or waiver of certain
conditions in the Merger Agreement.
The Exchange Offer and the Cash Election Merger
The Stipulation eliminated the provisions in the Merger Agreement
requiring Tyson and the Purchaser to commence the Exchange Offer described above
under "The Merger Agreement -- The Merger" and eliminated all related provisions
from the Merger Agreement. The Stipulation also eliminated the provisions in the
Merger Agreement requiring that Tyson, the Purchaser and IBP to effect the Cash
Election Merger under the circumstances described above under "The Merger
Agreement -- The Merger" and eliminated all related provisions from the Merger
Agreement.
IBP Representations
The Stipulation eliminated all of the representations and warranties of
IBP contained in the Merger Agreement, except for IBP's representations and
warranties (subject to a disclosure schedule provided by IBP to Tyson) relating
to its organization and governmental qualification; its articles of
incorporation and bylaws; capitalization; corporate authorizations; absence of
conflicts; and required filings and consents. Termination Fee
The Stipulation increased the Termination Fee described above under
"The Merger Agreement-- Fees and Expenses" from $15,000,000 to $59,000,000.
Covenant of Tyson
The Stipulation provides that Tyson will not split, combine or
reclassify any shares of its capital stock, declare, set aside or pay any
dividend or other distribution in respect of its capital stock except regular
quarterly dividends, or, redeem, repurchase or otherwise acquire or offer to
redeem, repurchase, or otherwise acquire any of its securities or any securities
of its subsidiaries.
Covenants of IBP
The Stipulation provides that all covenants in the Merger Agreement
would remain in full force and effect (subject to a disclosure schedule provided
by IBP to Tyson) except as noted in "Stipulation -- Termination Fee", but that
only compliance with the covenants relating to Conduct of IBP, Access to
Information, Notices of Certain Events
35
and Tax Matters would (subject to a disclosure schedule provided by IBP to
Tyson) be a condition to the Offer. See "The Merger Agreement -- Covenants of
IBP".
Mutual Covenants of Tyson and IBP
The Stipulation provides that IBP would commence preparation of the IBP
Proxy Statement and Tyson would promptly prepare the Merger Form S-4 and they
would cause such documents to be filed with the SEC as promptly as practicable.
The IBP Proxy Statement would be mailed to IBP's stockholders of record promptly
after the Merger Form S-4 has been declared effective by the SEC and the IBP
Shares acquired in the Offer have been registered in the name of Tyson or the
Purchaser. IBP would provide to the institutions providing the financing for the
Offer such reasonable and customary certificates as are necessary with respect
to its historical financial statements in connection with the obtaining of such
financing. IBP's compliance with these covenants (subject to a disclosure
schedule provided by IBP to Tyson) was a condition to the Offer.
Termination
The Stipulation provides that the date referred to in (b)(i) above
under "The Merger Agreement-- Termination" shall be changed to August 15, 2001.
The Stipulation also provides that the termination events described above in
(b)(ii), (c) and (f) under "The Merger Agreement-- Termination" are eliminated.
Recommendation
At a meeting held on June 26, 2001, the IBP Board, by a unanimous vote
of those present, determined that the Stipulation was in the best interests of
IBP and its stockholders and was the best means to resolve the outstanding
issues and disputes relating to the Merger Agreement and to facilitate
consummation of the transactions contemplated by the Merger Agreement. All of
the IBP Board members were present for the vote, except for Martin A.
Massengale, who expressed his support for the Stipulation at the meeting before
he excused himself from the meeting.
Voting Agreement
On January 1, 2001, the Partnership and IBP entered into the Voting
Agreement, a copy of which is filed as an exhibit to the Schedule TO, pursuant
to which the Partnership agreed to vote all of the shares of Tyson Class B
Common Stock that it owns to approve the issuance of Tyson Class A Common Stock
with respect to the Exchange Offer and the Merger at Tyson's stockholder
meeting. The Partnership owns 102,598,560 shares of Tyson Class B Common Stock
representing approximately 90% of the voting power of Tyson, thus assuring Tyson
shareholder approval. On June 27, 2001, the Partnership delivered a letter, a
copy of which is filed as an exhibit to the Schedule TO, by which the
Partnership consented to the Stipulation and confirmed that the terms of the
Voting Agreement remained in full force and effect. The written consent referred
to in this Information Statement has eliminated the requirement of a Tyson
stockholder meeting.
CERTAIN LEGAL MATTERS
IBP Stockholder and Merger Agreement Litigation in Delaware. Between
October 2 and November 1, 2000 fourteen purported class actions were filed in
the Delaware Court of Chancery against IBP and the members of the IBP Board, and
Rawhide Acquisition Corporation ("Rawhide") and its affiliates, entitled Baruch
Mappa v. Richard L. Bond, et
36
al., C.A. No. 18373-NC; Michael Taragin v. Richard L. Bond, et al., C.A. No.
18374-NC; David Shaev v. Rawhide Acquisition Corporation, et al., C.A. No.
18375-NC; Charles Miller v. Richard L. Bond, et al., C.A. No. 18376-NC; Olga
Fried v. Richard L. Bond, et al., C.A. No.18377-NC; Peter Robbins v. IBP, inc.,
et al., C.A. No. 18382-NC; Jerry Krim and Jeffrey Kassoway v. IBP, inc., et al.,
C.A. No. 18383-NC; Harriet Rand v. Richard L. Bond, et al., C.A. No. 18385-NC;
Albert Ominsky v. Richard L. Bond, et al., C.A. No. 18386-NC; Oliver Burt V.
Richard L. Bond, et al., C.A. No. 18398-NC; Eric Meyer v. Richard L. Bond, et
al., C.A. No. 18399-NC; Louise E. Murray v. Rawhide Acquisition Corporation, et
al., C.A. No. 18411-NC; Marvin Masel v. Richard L. Bond, et al., C.A. No.
18413-NC; and Rocco Landesman v. IBP, inc., C.A. No. 18474-NC, alleging that the
terms of the Rawhide Agreement were unfair to IBP's stockholders. On November
13, 2000, the Delaware Court of Chancery entered an order consolidating these
actions into a single action under the caption In re IBP, inc. Shareholders
Litigation, C.A. No. 18373-NC (the "Consolidated Action"). On December 5, 2000,
the Delaware Court of Chancery issued an order designating the Landesman
complaint as the operative complaint. On January 8, 2001, plaintiffs filed a
consolidated amended complaint in the Consolidated Action which added Tyson and
Purchaser as defendants and alleged, on behalf of the class of IBP's
stockholders, that the proposed transaction between IBP and Tyson was also
unfair and had been entered into in breach of the fiduciary duties of IBP's
Board, with the complicity of Tyson. Plaintiffs also asserted a derivative claim
on behalf of IBP, alleging that its directors wrongfully agreed to the Rawhide
Agreement and the termination fee and expense reimbursement provisions therein.
On March 29, 2001, Tyson filed an action in the Chancery Court of
Washington County, Arkansas, entitled Tyson Foods, Inc. et al. v. IBP, inc.,
Case No. E 2001-749-4 (the "Arkansas Lawsuit"), alleging that Tyson had been
inappropriately induced to enter into the Merger Agreement and that IBP was in
breach of various representations and warranties made in the Merger Agreement.
On March 30, 2001, IBP filed an answer to the amended consolidated
complaint and a cross-claim (amended on April 2, 2001) against Tyson in the
Consolidated Action. As amended, IBP's cross-claim sought a declaration that
Tyson could not rescind or terminate the Merger Agreement, specific enforcement
of the Merger Agreement and damages for breach of the Confidentiality Agreement.
On April 2, 2001, IBP filed amended cross- claims against Tyson to add an
alternative claim for damages and a claim for breach of the Confidentiality
Agreement. On April 19, 2001, the Delaware Court of Chancery issued a temporary
restraining order in the Consolidated Action prohibiting Tyson from proceeding
with the Arkansas Lawsuit.
On April 23, 2001, Tyson filed an answer and affirmative defenses in
the Consolidated Action, denying the material allegations against it and
asserting counterclaims (amended on May 3, 2001) against IBP. As amended, the
counterclaims asserted claims for fraud, constructive fraud, negligent
misrepresentation, material misrepresentation and mistake in connection with the
inducement of the Merger Agreement, for breach of representations and warranties
in the Merger Agreement, and related declaratory relief. On April 27, 2001,
plaintiffs filed a second consolidated and amended complaint in the Consolidated
Action seeking declaratory relief and specific performance of Tyson's alleged
obligation to consummate the previously commenced and terminated cash tender
offer (the "Cash Tender Offer") and asserting a derivative claim against IBP's
directors in connection with IBP's payment of the Rawhide termination fee. On
May 10, 2001 the Delaware Court of Chancery denied Tyson's motion for partial
summary judgment, and dismissed without prejudice IBP's claim for damages for
breach of the Confidentiality Agreement. On May 13, 2001, IBP filed a reply and
affirmative defenses to the counterclaims which denied the material allegations
against it. Following expedited discovery, the Delaware Court of Chancery
conducted a nine day trial, beginning on May 14, 2001, on IBP's and the
plaintiffs' claims for specific performance with respect to the Cash Tender
Offer and the Merger Agreement and Tyson's counterclaims. On June 15, 2001,
following expedited post-trial briefing, the Delaware Court of Chancery issued a
memorandum opinion, which was issued in revised form on June 18, 2001 (the
"Post-Trial Opinion"), in which the Court concluded, among other things, that
(1) the Merger Agreement is a valid and enforceable contract that was not
induced by any material misrepresentation or omission, (2) Tyson did not breach
the Merger Agreement or any duty to IBP's stockholders by failing to close the
Cash Tender Offer, (3) Tyson did not have a basis to terminate the Merger
Agreement under its terms, and (4) specific performance of the Merger Agreement
was the only method by which to adequately redress the harm threatened to IBP
and its stockholders.
Subsequently, counsel for plaintiffs in the Consolidated Action
negotiated with Tyson and IBP in an effort to reach a settlement of the class
and derivative claims in the Consolidated Action. Negotiations also took place
37
between IBP and Tyson concerning their respective claims against each other. As
a result of these negotiations and in accordance with the Post-Trial Opinion,
Tyson and IBP presented an Order, Judgment and Decree to the Delaware Court of
Chancery, entered on June 27, 2001, requiring Tyson and its affiliates to
specifically perform the Merger Agreement as modified by, and subject to the
conditions contained in, the Stipulation, including making this Offer and
effecting the Merger. See "The Stipulation". The Stipulation provides that if
the Offer is not consummated by August 15, 2001 (or by September 1, 2001, if
Tyson has failed to obtain financing to pay for tendered shares by such earlier
date) or the Merger is not consummated by November 15, 2001, (a) either IBP or
Tyson will be entitled to move the Delaware Court of Chancery for an appropriate
remedy including, but not limited to, specific performance of such transactions,
specific performance of the Cash Election Merger, and/or damages, and each party
will be entitled to oppose any such motion on any appropriate grounds, and (b)
IBP will be entitled to move for an award of interest and/or an adjustment to
the financial terms of the consideration to be paid to the stockholders on
account of what the Delaware Court of Chancery has determined to be Tyson's
breach, and Tyson will be entitled to oppose such motion on any appropriate
grounds. The Stipulation further provides that nothing other than Tyson's
consummation of the Offer and the Merger will be deemed to exculpate Tyson from
any liability for breach of the Merger Agreement under the Opinion.
The Stipulation states that the Delaware Court of Chancery retains
exclusive jurisdiction over the Consolidated Action to assure compliance with
the terms of the Order, Judgment and Decree and the Stipulation. Tyson has
agreed not to seek to vacate or modify the Delaware Court of Chancery's
preliminary injunction dated May 10, 2001 and not to commence any action against
IBP arising out of or relating to the Stipulation in any other forum unless and
until the Delaware Court of Chancery determines that Tyson is not required to
consummate the Offer or IBP moves for an award of interest, an adjustment to the
financial terms of the consideration to be paid to IBP's stockholders and/or
damages on account of what such Court has determined to be Tyson's breach of the
Merger Agreement. Tyson has agreed that, promptly following consummation of the
Offer, it will take all necessary steps to obtain dismissal of the Arkansas
Lawsuit.
The Order, Judgment and Decree is not currently an appealable order.
The Stipulation provides that neither Tyson nor IBP will move for the entry of
an appealable order unless and until the Delaware Court determines that Tyson is
not required to consummate the Offer or IBP moves for an award of interest, an
adjustment to the financial terms of the consideration to be paid to IBP's
stockholders and/or damages on account of what the Delaware Court of Chancery
has determined to be Tyson's breach of the Merger Agreement.
On June 27, 2001, the parties to the Consolidated Action, including the
plaintiffs in such action, entered into a stipulation of settlement, subject to
approval by the Delaware Court of Chancery (the "Settlement Order"), which
provides that:
o Tyson has agreed to proceed with the performance of its
obligations under the Merger Agreement, as revised by the
Stipulation, including making the Offer and effecting the
Merger, subject to the terms and conditions set forth in the
Merger Agreement as modified by the Stipulation, and without
taking an immediate appeal from the rulings in the Post-Trial
Opinion;
o IBP has agreed to obtain from JP Morgan an updated opinion on
the fairness to IBP's stockholders from a financial point of
view of the Merger Agreement as modified by the Stipulation;
o Tyson and IBP have agreed that plaintiffs' counsel may review
and comment upon draft tender offer documents and proxy
materials for IBP's stockholders in connection with the
Merger; plaintiffs' class claims against all defendants in the
Consolidated Action shall be dismissed and plaintiffs'
derivative claims on behalf of IBP against all defendants as
asserted in the Consolidated Action shall be dismissed; and
o all claims that were or could have been asserted in the
Consolidated Action shall be extinguished.
On August 3, 2001, the Delaware Court of Chancery held a hearing to determine
whether the Settlement Order should be approved. After the conclusion of the
hearing, the Court entered the Settlement Order in modified form, excluding from
the description of claims extinguished by the settlement the securities claims
against Tyson and IBP described below. The Court also awarded the plaintiffs'
attorneys an award of fees and expenses of $300,000, to be paid by Tyson and
IBP.
38
Tyson Stockholder Derivative Litigation. On June 19, 2001, Alan
Shapiro, a purported Tyson stockholder, commenced a derivative action on behalf
of Tyson seeking monetary damages in the Delaware Court of Chancery. The action,
entitled Alan Shapiro v. Barbara R. Allen, et al., C.A. No. 18967-NC, names as
individual defendants the members of Tyson's Board of Directors and several
current and former Tyson executives. Tyson is named as nominal defendant. The
complaint alleges that the individual defendants violated their fiduciary duties
by attempting to terminate the Merger Agreement and that as a result, Tyson has
been harmed. Tyson and the individual defendants intend to vigorously defend
these claims and, on July 17, 2001, filed a motion to dismiss the complaint. A
schedule for briefing on the motion to dismiss has not yet been agreed upon by
the parties or ordered by the Court.
IBP Stockholder Securities Litigation Against Tyson. Between June 22
and July 20, 2001, various plaintiffs commenced purported class actions against
Tyson, Don Tyson, John Tyson and Les R. Baledge in the United States District
Court for the District of Delaware, seeking monetary damages on behalf of IBP's
stockholders. The actions, entitled Meyer v. Tyson Foods, Inc., et al., C.A. No.
01-425 SLR, Banyan Equity Mgt. v. Tyson Foods, Inc. et al., C.A. No. 01-426 GMS,
Steiner v. Tyson Foods, Inc., et al., C.A. No. 01-462 GMS, Aetos Corp. et al. v.
Tyson, et al., C.A. No. 01-463 GMS, Meyers, et al. v. Tyson Foods, Inc., et al.,
C.A. No. 01-489, Binsky v. Tyson Foods, Inc., et al., C.A. No. 01-495, and
Management Risk Trading LP v. Tyson Foods, Inc., et al., C.A. No. 01-496 assert
claims under the Exchange Act. Specifically, they allege that the defendants
violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated
thereunder, and that the individual defendants violated Section 20(a) of the
Exchange Act by making, or causing to be made, allegedly false and misleading
statements in connection with Tyson's attempted termination of the Merger
Agreement. It is alleged that as a result of the defendants' conduct, plaintiffs
and other members of the class who sold IBP Shares during the period from March
29, 2001 through June 15, 2001, were harmed. Tyson intends to vigorously defend
these claims.
Other IBP Stockholder Securities Litigation Against IBP. On November 8,
2000, an action was filed in the United States District Court for the District
of South Dakota entitled Teamsters Local Nos. 175 And 505 Pension Trust Fund v.
IBP, inc. et al., C.A. No. 00-4211. This complaint named as defendants IBP,
each of its directors, DLJ, Archer-Daniels-Midland Company and Booth Creek
Partners Limited III, L.L.L.P. Seeking to represent a purported class of IBP's
stockholders excluding the defendants, plaintiff alleged that IBP's directors,
aided and abetted by the other defendants, breached their fiduciary duties to
plaintiffs and the alleged class by (1) entering into the Rawhide Agreement and
agreeing to sell IBP at an inadequate price, (2) advancing their personal
interests at the expense of IBP's public stockholders and (3) erecting barriers
to competing bids, including the termination fee provisions in the Rawhide
Agreement. The Teamsters complaint requested preliminary and permanent
injunctive relief against consummation of the Rawhide merger, rescission of the
Rawhide merger in the event it was consummated, monetary damages and an award of
attorneys' fees. On December 7, 2000, the South Dakota federal district court
granted the defendants' motion to stay this action pending resolution of the
Consolidated Action and denied as moot the plaintiff's application for a
temporary restraining order enjoining the enforcement of the termination fee and
"no shop" provisions of the Rawhide Agreement. The Teamsters voluntarily
dismissed their action without prejudice in April 2001.
On January 11, 2001, a second shareholder lawsuit was commenced in the
South Dakota federal district court entitled Reier v. Bond, et al., C.A. No.
01-4010. Purporting to sue derivatively on behalf of IBP, the plaintiff asserted
claims against IBP's directors under the federal securities laws and state
common law. Plaintiff alleged that defendants caused IBP to file a false and
misleading Schedule 14D-9 in response to Tyson's cash tender offer in
39
violation of Section 14(e) of the Exchange Act by, among other things, (i)
failing to disclose facts relating to the commercial relationship between JP
Morgan and Tyson, (ii) representing that defendants had determined that the
Tyson Cash Tender Offer, Exchange Offer and Merger were fair to and in the best
interests of IBP, and (iii) including financial projections that understated
IBP's revenue, net income and margins in order to justify such determination.
Plaintiff further alleged that IBP's directors breached their fiduciary duties
by agreeing to the termination fee provisions of the Rawhide Agreement on
October 1, 2000 and accepting Tyson's bid on January 1, 2001 even though it
offered consideration "substantially below the consideration being offered by
another bidder." The complaint sought: (a) declarations that IBP's Schedule
14D-9 violated the federal securities laws and that the Rawhide Agreement and
Merger Agreement were entered into in breach of defendants' fiduciary duties;
(b) an order directing defendants to exercise their fiduciary duties to obtain a
transaction which is in IBP's best interests; (c) compensatory damages of not
less than $442 million and punitive damages; and (d) the costs and disbursements
of the action, including reasonable attorneys' and experts' fees. On January 30,
2001, defendants moved to stay this action pending resolution of the
Consolidated Action and to dismiss the Section 14(e) claim for failure to state
a claim on which relief may be granted. The motion remains pending.
Between February 12 and April 5, 2001, six lawsuits were filed by
certain purported stockholders of IBP in the United States District Court for
the District of South Dakota and a seventh suit was filed in the United States
District Court for the Southern District of New York against IBP and certain
members of IBP's senior management. The actions filed in the United States
District Court for the District of South Dakota are captioned Krim v. Iowa Beef
Processors, Inc., et al., Meyer v. Iowa Beef Processors, Inc., et al., Dearman
v. Iowa Beef Processors, Inc., Mulligan Partners, L.P. et al. v. IBP, inc. et
al., Barrie v. Iowa Beef Processors, Inc. et al., and Rourke et al. v. Iowa Beef
Processors, Inc. et al. The action in the United States District Court for the
Southern District of New York is captioned Gottesman v. Iowa Beef Processors,
Inc. et al. These lawsuits each allege that the defendants violated sections
10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder, by
issuing materially false statements about IBP's financial results for 1999 and
the first three quarters of 2000. The plaintiffs in these actions seek
certification of a class of all persons who purchased IBP common stock between
February 7, 2000 and either January 25, 2001 or March 13, 2001. On July 18,
2001, the United States District Court for the District of South Dakota issued
an order appointing Tiedemann Investment Group as lead plaintiff under the
Private Securities Litigation Reform Act of 1996 for the actions pending in that
court and directed Tiedemann Investment Group to file a consolidated amended
complaint within 20 days of its receipt of the court's order. The action in the
United States District Court for the Southern District of New York was dismissed
without prejudice, and the plaintiff in that action has refiled the action in
the United States District Court for the District of South Dakota.
40
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners
The following table sets forth certain information as of June 30, 2001
regarding the only persons known by Tyson to own, directly or indirectly, more
than 5% of Tyson Common Stock:
Name and Address of Beneficial Number of Shares Percent of
------------------------------ ---------------- ----------
Owner Title of Class Beneficially Owned Class
----- -------------- ------------------ -----
Don Tyson and Tyson Limited Class B Common Stock 102,598,560(1) 99.9
Partnership
2210 West Oaklawn Drive
Springdale, AR 72762-6999
AXA Financial, Inc. Class A Common Stock 11,865,920(2) 10.1
1290 Avenue of the Americas
New York, NY 10104
Mellon Bank N.A. Class A Common Stock 11,193,242(3) 9.5
One Mellon Center,
Room 0980
Pittsburgh, PA 15258-0001
Barclays Bank PLC Class A Common Stock 7,903,088(4) 6.7
54 Lombard Street
London, England EC3P3AH
(1) Includes 750,000 shares of Tyson Class B Common Stock owned of record
by Don Tyson, Senior Chairman of the Board of Tyson, and 101,848,560
shares of Tyson Class B Common Stock owned of record by the Tyson
Limited Partnership, a Delaware limited partnership (the
"Partnership"). Don Tyson has a 54.3123 combined percentage interest as
a general and limited partner in the Partnership and the Estate of
Randal Tyson has a 45.062 percentage interest as a limited partner in
the Partnership. Barbara A. Tyson, the widow of Randal Tyson and a
Director of Tyson, has limited dispositive power with respect to, and
is the principal income beneficiary of, the Estate of Randal Tyson. Don
Tyson's adult children, including John H. Tyson, Chairman, President
and Chief Executive Officer of Tyson, are contingent beneficiaries of
such estate. The managing general partner of the Partnership is Don
Tyson. The other general partners are Leland E. Tollett, a Director of
Tyson; Barbara Tyson; John H. Tyson; James B. Blair and Harry C. Erwin,
III. Don Tyson, as managing general partner, has the exclusive right,
subject to certain restrictions, to do all things on behalf of the
Partnership necessary to manage, conduct, control and operate the
Partnership's business, including the right to vote all shares or other
securities held by the Partnership, as well as the right to mortgage,
pledge or grant security interests in any assets of the Partnership.
The Partnership terminates December 31, 2040. Additionally, the
Partnership may be dissolved upon the occurrence of certain events,
including (i) a written determination by the managing general partner
that the projected future revenues of the Partnership will be
insufficient to enable payment of costs and expenses, or that such
future revenues will be such that continued operation of the
Partnership will not be in the best interest of the partners, (ii) an
election to dissolve the Partnership by the managing general partner
that is approved by the affirmative vote of a majority in percentage
interest of all general partners, and (iii) the sale of all or
substantially all of the Partnership's assets and properties. The
withdrawal of the managing general partner or any other general partner
(unless such partner is the sole remaining general partner) will not
cause a dissolution of the Partnership. Upon dissolution of the
Partnership, each partner, including all limited partners, will receive
in cash or otherwise, after payment of
41
creditors, loans from any partner, and return of capital account
balances, their respective percentage interests in the Partnership
assets.
(2) Based solely on information obtained from a Form 13F filed by AXA
Financial, Inc. ("AXA") with the SEC on or about May 14, 2001. The
foregoing information has been included solely in reliance upon, and
without independent investigation of, the disclosures contained in
AXA's Form 13F.
(3) Based solely on information obtained from a Form 13F filed by Mellon
Bank N.A. ("Mellon") with the SEC on or about July 23, 2001. The
foregoing information has been included solely in reliance upon, and
without independent investigation of, the disclosures contained in
Mellon's Form 13F.
(4) Based solely on information obtained from a Form 13F filed by Barclays
Bank PLC ("Barclays") with the SEC on or about May 31, 2001. The
foregoing information has been included solely in reliance upon, and
without independent investigation of, the disclosures contained in
Barclays' Form 13F.
Tyson Common Stock Ownership Of Management
The following table sets forth information with respect to the
beneficial ownership of Tyson Common Stock, as of June 30, 2001, by Tyson
directors, nominees for election as directors, names executive officers and by
all director and executive officers as a group:
Percent of
Shares of Class A Percent of Shares of Class B Outstand-
Common Stock Outstanding Common Stock ing Class B Aggregate
Name of Beneficial Beneficially Class A Beneficially Common Voting
Owner Owned(1) Common Stock Owned(1) Stock Percentage
----- -------- ------------ -------- ----- ----------
Don Tyson(2) 86,060 * 102,598,560 99.9 89.7
Leland E. Tollett(3) 3,259,023 2.8 *
Joe F. Starr(4) 2,058,833 1.7 *
42
Donald E. Wray 830,084 * *
Gerald M. Johnston 750,435 * *
John H. Tyson(3)(4) 644,861 * *
Greg W. Lee 221,619 * *
Barbara A. Tyson (3) 162,091 * *
John S. Lea 111,682 * *
William W. Lovette 86,417 * *
Shelby D. Massey 35,778 * *
Lloyd V. Hackley 11,018 * *
Jim Kever 129 * *
Barbara Allen 0 * *
David A. Jones 0 * *
All Directors and 8,819,427 7.5 102,598,560 99.9 90.4
Executive Officers as a
Group (28 persons)
* Indicates ownership or aggregate voting percentage of less than 1%.
(1) Includes beneficial ownership of shares with respect to which voting or
investment power may be deemed to be directly or indirectly controlled.
Accordingly, the shares shown in the foregoing table include shares
owned directly, shares held in such person's accounts under Tyson's
Employee Stock Purchase Plan and Retirement Savings Plan, shares owned
by certain of the individual's family members and shares held by the
individual as a trustee or in a fiduciary or other similar capacity,
unless otherwise disclaimed and/or described below. Also includes
shares subject to presently exercisable options held by certain named
individuals.
(2) Includes all shares of Tyson Class B Common Stock owned of record by
the Tyson Limited Partnership as described in Footnote 1 to the Certain
Beneficial Owners table.
(3) Does not include any shares of Class B Common Stock owne of record by
the Tyson Limited Partnership of which Leland E. Tollett, John H. Tyson
and Barbara Tyson have a general partnership interest. See Footnote 1
to the Certain Beneficial Owners table.
(4) Does not include 417,900 shares of Tyson Class A Common Stock held by
the Tyson Foundation, a nonprofit charitable organization. Joe F. Starr
and John H. Tyson are trustees of the Tyson Foundation and disclaim
beneficial ownership of all such shares.
43
AVAILABLE INFORMATION
Tyson and IBP file annual, quarterly and special reports, proxy
statements and other information with the SEC under the Exchange Act. You may
read and copy this information at the following locations of the SEC:
Public Reference Room North East Regional Office Midwest Regional Office
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at l-800-SEC-0330.
The SEC also maintains a web site that contains reports, proxy
statements and other information about issuers, like Tyson and IBP, who file
electronically with the SEC. The address of that site is http://www.sec.gov.
You can also inspect reports, proxy statements and other information
about Tyson at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Tyson
The following documents heretofore filed by Tyson under the Exchange
Act with the SEC are incorporated herein by reference:
(1) Tyson's Annual Report on Form 10-K for fiscal years ended September
27, 1997, October 3, 1998 and September 30, 2000;
(2) Tyson's Quarterly Reports on Form 10-Q for the period ended April
1, 2000 and March 31, 2001;
(3) Tyson's Proxy Statement dated December 8, 2000; and
(4) Tyson's Current Report on Form 8-K dated June 18, 2001.
IBP
The following documents heretofore filed by IBP under the Exchange Act
with the SEC are incorporated herein by reference:
(1) IBP's Annual Report on Form 10-K for the year ended December 30,
2000;
(2) IBP's Quarterly Reports on Form 10-Q for the thirteen weeks ended
March 31, 2001;
(3) IBP's Proxy Statement dated March 31, 2001; and
(4) IBP's Current Reports on Form 8-K dated February 21, March 13 and
March 20, 2001.
44
Tyson will provide without charge to each person to whom a copy of this
Information Statement has been delivered, on written or oral request, a copy of
any and all of the documents referred to above that have been or may be
incorporated by reference herein other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference herein). Requests will
be delivered by first class mail or other equally prompt means within one
business day of receipt of such request. Requests for such copies should be
directed to:
TYSON FOODS, INC.,
2210 WEST OAKLAWN DRIVE,
SPRINGDALE, ARKANSAS 72762-6999,
ATTENTION: OFFICE OF THE CORPORATE SECRETARY,
(501) 290-4000
All documents filed by Tyson pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Information Statement
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Information Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Information Statement.
45
ANNEX A
[LETTERHEAD OF MERRILL LYNCH]
January 1, 2001
Board of Directors Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762
Members of the Board of Directors:
IBP, inc. (the "Company"), Tyson Foods, Inc. (the "Acquiror") and Lasso
Acquisition Corporation, a wholly owned subsidiary of the Acquiror (the
"Acquisition Sub"), have entered into an Agreement and Plan of Merger dated as
of January 1, 2001 (the "Agreement") pursuant to which (i) the Acquiror and the
Acquisition Sub will amend the outstanding tender offer (the "Offer") to acquire
50.1% of the issued and outstanding shares of common stock, par value $.05 per
share, of the Company (the "Company Shares"), including Company Shares already
owned by the Acquiror, to reflect a purchase price of $30.00 per share net to
the seller in cash (the "Cash Consideration"), (ii) the Acquiror and the
Acquisition Sub will commence an offer to exchange (the "Exchange Offer") for
each Company Share not accepted for payment and paid for in the Offer the number
of shares (the "Stock Consideration") of Class A Common Stock, par value $0.10
per share, of the Acquiror (the "Acquiror Shares") equal to the Exchange Offer
Ratio (as defined below), and (iii) the Company will be merged with and into the
Acquisition Sub in a merger (the "Merger") in which each Company Share not
acquired in the Offer and the Exchange Offer, other than Company Shares held in
treasury or owned by the Acquiror or any of its subsidiaries, all of which shall
be canceled, would be converted into the right to receive the number of Acquiror
Shares (the "Merger Consideration," and collectively with the Cash Consideration
and the Stock Consideration, taken as a whole, the "Consideration") equal to the
Exchange Ratio (as defined below). The Offer, the Exchange Offer and the Merger,
taken together, are referred to as the "Transaction."
For purposes of our opinion: (i) the term "Exchange Offer Ratio" shall
be equal to (a) if the Average Price (as defined below) is equal to or greater
than $15.40, 1.948 Acquiror Shares (b) if the Average Price is less than $15.40
and greater than $12.60, the number of Acquiror Shares equal to $30.00 divided
by the Average Price, or (c) if the Average Price is equal to or less than
$12.60, 2.381 Acquiror Shares; (ii) the term "Exchange Ratio" shall be equal to
(a) if the Average Acquiror Common Stock Price (as defined below) is equal to or
greater than $15.40, 1.948 Acquiror Shares, (b) if the Average Acquiror Common
Stock Price is less than $15.40 and greater than $12.60, the number of Acquiror
Shares equal to $30.00 divided by the Average Acquiror Common Stock Price, or
(c) if the Average Acquiror Common Stock Price is equal to or less than $12.60,
2.381 Acquiror Shares; (iii) the term "Average Price" means the average of the
closing price per share of the Acquiror Shares on the New York Stock Exchange
for the 15 trading days ending on the second trading day immediately preceding
the expiration date of the Exchange Offer; and (iv) the term "Average Acquiror
Common Stock Price" means the average of the closing price per share of the
Acquiror Shares on the New York Stock Exchange for the 15 trading days ending on
the fifth trading day immediately preceding the effective date of the merger.
You have asked us whether, in our opinion, the Consideration to be paid
by the Acquiror pursuant to the Transaction is fair from a financial point of
view to the Acquiror.
In arriving at the opinion set forth below, we have, among other
things:
(1) Reviewed certain publicly available business and financial
information relating to the Company and the Acquiror that we deemed to
be relevant;
(2) Reviewed certain information, including financial
forecasts, relating to the business, earnings, cash flow, assets,
liabilities and prospects of the Company and the Acquiror furnished to
us by the Company and the Acquiror, respectively;
46
(3) Conducted discussions with members of senior management
and representatives of the Company and the Acquiror concerning the
matters described in clauses 1 and 2 above, as well as their respective
businesses and prospects before and after giving effect to the
Transaction;
(4) Reviewed the market prices and valuation multiples for the
Company Shares and compared them with those of certain publicly traded
companies that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and
compared them with those of certain publicly traded companies that we
deemed to be relevant;
(6) Compared the proposed financial terms of the Transaction
with the financial terms of certain other transactions that we deemed
to be relevant;
(7) Participated in certain discussions and negotiations among
representatives of the Company and the Acquiror and their financial and
legal advisors;
(8) Reviewed the potential pro forma impact of the
Transaction;
(9) Reviewed the Agreement; and
(10) Reviewed such other financial studies and analyses and
took into account such other matters as we deemed necessary, including
our assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or the Acquiror or been furnished with any such
evaluation or appraisal. In addition, we have not assumed any obligation to
conduct any physical inspection of the properties or facilities of the Company
or the Acquiror. With respect to the financial forecast information furnished to
or discussed with us by the Company or the Acquiror, we have assumed that they
have been reasonably prepared and reflect the best currently available estimates
and judgment of the Company's or the Acquiror's management as to the expected
future financial performance of the Company or the Acquiror, as the case may be.
We have further assumed that the Offer, the Exchange Offer and the Merger, taken
together, will qualify as a tax- free reorganization for U.S. federal income tax
purposes.
Our opinion is necessarily based upon market, economic and other
conditions as they exist and can be evaluated on, and on the information made
available to us as of, the date hereof. We have assumed that in the course of
obtaining the necessary regulatory or other consents or approvals (contractual
or otherwise) for the Transaction, no restrictions, including any divestiture
requirements or amendments or modifications, will be imposed that will have a
material adverse effect on the contemplated benefits of the Transaction.
We are acting as financial advisor to the Acquiror in connection with
the Transaction and will receive a fee from the Acquiror for our services, a
significant portion of which is contingent upon the acceptance for payment by
the Acquiror of Company Shares pursuant to the Offer. In addition, the Acquiror
has agreed to indemnify us for certain liabilities arising out of our
engagement. We have, in the past, provided financial advisory and financing
services to the Acquiror and/or its affiliates and may continue to do so and
have received, and may receive, fees for the rendering of such services. In
addition, in the ordinary course of our business, we may actively trade the
Company Shares and other securities of the Company as well as the Acquiror
Shares and other securities of the Acquiror, for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of Directors of
the Acquiror. Our opinion does not address the merits of the underlying decision
by the Acquiror to engage in the Transaction and does not constitute a
recommendation to any shareholder of the Acquiror as to how such shareholder
should vote on the issuance of the
47
Acquiror Shares pursuant to the Exchange Offer, the Merger and the transactions
contemplated by the Agreement or any matter related thereto.
We are not expressing any opinion herein as to the prices at which the
Acquiror Shares will trade following the announcement or consummation of the
Transaction.
On the basis of and subject to the foregoing, we are of the opinion
that, as of the date hereof, the Consideration to be paid by the Acquiror
pursuant to the Transaction is fair from a financial point of view to the
Acquiror.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
48
ANNEX B
[LETTERHEAD OF STEPHENS INC.]
January 1, 2001
Board of Directors Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
Ladies and Gentlemen:
We have acted as your financial advisor in connection with the proposed
merger (the "Transaction") among Tyson Foods, Inc. ("Tyson"), Lasso Acquisition
Corporation ("Purchaser"), a wholly-owned subsidiary of Tyson, and IBP, inc.
("IBP" or the "Company"), pursuant to which Tyson will acquire the Company.
Among other things, the Agreement and Plan of Merger dated as of January 1, 2001
(the "Merger Agreement") provides for Tyson, through Purchaser, to purchase up
to 50.1% of the common stock, par value $.05 per share of IBP (the "IBP Common
Stock"), for $30.00 per IBP share in cash. The Merger Agreement also provides
for Tyson, through Purchaser, to exchange its Class A Common Stock valued (in
accordance with the terms of the Merger Agreement) at $30.00 for each IBP share,
subject to adjustment, for all remaining IBP shares not then owned by Tyson.
Finally, the Merger Agreement provides for IBP to merge into Purchaser, at which
time each remaining IBP share will be converted into the right to receive Tyson
Class A Common Stock valued at $30.00, subject to adjustment (the "Merger"). The
terms and conditions of the Transaction are more fully set forth in the Merger
Agreement.
You have requested our opinion as to whether the consideration to be
paid pursuant to the Merger Agreement in the aggregate is fair from a financial
point of view to Tyson.
In connection with rendering our opinion we have:
(i) analyzed certain publicly available financial statements
and reports regarding the Company and Tyson;
(ii) analyzed certain internal financial statements and other
financial and operating data (including financial projections)
concerning the Company and Tyson prepared by management of the Company
and Tyson;
(iii) analyzed, on a pro forma basis, the effect of the
Transaction on Tyson's balance sheet, capitalization ratios, earnings
and book value both in the aggregate and, where applicable, on a per
share basis during certain periods;
(iv) reviewed the reported prices and trading activity of the
IBP Common Stock and Tyson Class A Common Stock;
(v) compared the financial performance of the Company and
Tyson and the prices and trading activity of the IBP Common Stock and
Tyson Class A Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(vi) reviewed the financial terms, to the extent publicly
available, of certain comparable transactions;
(vii) reviewed the Merger Agreement and related documents;
(viii) discussed with management of Tyson the operations of
and future business prospects for the Company and Tyson and the
anticipated financial consequences of the Transaction; and
49
(ix) performed such other analyses and provided such other
services as we have deemed appropriate.
We have relied on the accuracy and completeness of the information and
financial data provided to us by Tyson, and our opinion is based upon such
information. We have not inquired into the reliability of such information and
financial data recognizing that we are rendering only an informed opinion and
not an appraisal or certification of value. With respect to the financial
projections prepared by management of the Company and Tyson, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company and Tyson.
As part of our investment banking business, we regularly issue fairness
opinions and are continually engaged in the valuation of companies and their
securities in connection with business reorganizations, private placements,
negotiated underwritings, mergers and acquisitions and valuations for estate,
corporate and other purposes. We are familiar with the Company and Tyson and
regularly provide investment banking services to Tyson and issue periodic
research reports regarding its business activities and prospects. In the
ordinary course of business, Stephens and its affiliates at any time may hold
long or short positions, and may trade or otherwise effect transactions as
principal or for the accounts of customers, in debt or equity securities or
options on securities of the Company and Tyson. Stephens is receiving a fee, and
reimbursement of its expenses, in connection with the issuance of this fairness
opinion.
Based on the foregoing and our general experience as investment
bankers, and subject to the qualifications stated herein, we are of the opinion
on the date hereof that the consideration to be paid pursuant to the Merger
Agreement in the aggregate is fair from a financial point of view to Tyson.
This opinion and a summary discussion of our underlying analyses and
role as your financial advisor may be included in communications to Tyson's and
the Company's shareholders provided that we approve of such disclosures prior to
publication.
Very truly yours,
STEPHENS INC.
50