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FTC faces dual IBP filings
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December 18, 2000: 4:55 p.m. ET
Smithfield files for FTC OK on IBP deal; follows Tyson's filing for agency OK
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NEW YORK (CNNfn) - Despite the lack of a firm agreement, Smithfield Foods Inc. Monday submitted its $2.6 billion acquisition offer for meatpacking company IBP Inc. for federal regulatory review, declaring its proposal financially and strategically superior to a competing bid already filed by rival Tyson Foods.
The Smithfield, Va.-based company, the No. 1 U.S. pork producer, filed the merger proposal with the Antitrust Division of the U.S. Department of Justice and the U.S. Federal Trade Commission under the Hart-Scott Rodino Antitrust Improvement Act, designed to weigh a potential merger's impact on an industry's competitive landscape.
The filings comes just four days after Tyson filed similar documents with federal authorities, seeking regulatory approval for its $2.6 billion cash-and-stock bid.
IBP (IBP: Research, Estimates) announced last week that its board is mulling the cash component of Tyson's bid, which offers to purchase 50.1 percent of the company's stock for $26 per share in cash, while continuing to negotiate with the world's largest poultry producer on the stock component of the deal. IBP has also opened negotiations with Smithfield, but has not officially accepted either offer.
In making its filing, however, Smithfield reiterated earlier comments that it continues to believe "that our offer is superior to the Tyson bid."
 Smithfield noted that based on closing prices Friday, the valuation of Tyson's bid has fallen to $24.61 per share from its initial $26 because the Springdale, Ark.-based company's stock price has fallen below the minimum "collar" set out in its proposal. That collar lowers the deal's valuation if Tyson's stock falls below $12.60 per share.
Tyson (TSN: Research, Estimates) closed Monday up 50 cents to $11.75.
Smithfield's all-stock offer values IBP at $25 per share and, like Tyson's bid, is subject to a collar that would impact IBP's valuation if Smithfield's stock price fell below $28.46 per share.
However, Smithfield (SFD: Research, Estimates) closed Monday at $29.20, up 14 cents, leaving the two offers with virtually identical valuations for the No. 1 U.S. meatpacking company.
"We are continuing to move forward with our evaluation of IBP through the conduct of due diligence and consideration of our next steps," Smithfield said in a prepared statement. "In moving forward with our proposal, and since Tyson has chosen to unilaterally launch a coercive tender offer and make its own regulatory filings, we decided that it makes sense for us to commence our regulatory process and start our own clock running."
FTC spokesman Mitchell Katz said while it was unusual for the committee to be faced with two competing merger offers for the same company at once, it would not impact the review process.
"The FTC doesn't really have a stake in either one," he said. "From an efficiency standpoint, it would be great if the one with the fewest antitrust concerns was left standing. But at the end of the day, it would be all the same to us."
Both the Smithfield and Tyson offers have drawn concerns from federal and industry officials for their potential to severely reduce the level of competition in the meatpacking and processing industries.
IBP shares gave back 31 cents to $25.31 Monday. 
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Tyson Foods
IBP Inc.
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