Filed pursuant to Rule No. 424(b)(3)
Registration No. 333-67352
[LOGO] ibp/R/
August 28, 2001
PROPOSED MERGER--YOUR VOTE IS IMPORTANT
The boards of directors of both Tyson Foods, Inc. and IBP, inc. have agreed
to a merger in which IBP will merge into Lasso Acquisition Corporation, a
wholly owned subsidiary of Tyson.
In exchange for each share of IBP common stock, IBP stockholders will have
the right to receive a number of shares of Tyson Class A common stock having a
value of $30.00 if, during the fifteen trading day period ending on the fifth
trading day immediately preceding the effective time of the merger, the average
per share 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, then each IBP share outstanding immediately prior to the
effective time of the merger will be exchanged for 2.381 shares of Tyson Class
A common stock. If the average per share price of Tyson Class A common stock is
more than $15.40, then each IBP share outstanding immediately prior to the
effective time of the merger will be exchanged for 1.948 shares of Tyson Class
A common stock. The closing price of shares of Tyson Class A common stock was
$10.26 on August 27, 2001, the last full trading day before the date of this
document. If that were the average per share price of Tyson Class A common
stock during the relevant fifteen trading day period, IBP stockholders would
receive 2.381 shares of Tyson Class A common stock with a market value of
$24.43 based on that average price in exchange for each share of IBP common
stock.
In order to complete this merger, we need the approval of IBP stockholders.
The holders of at least a majority of the outstanding shares of IBP common
stock must vote to approve and adopt the merger agreement and the merger at a
special meeting of IBP stockholders, which will be held at IBP World
Headquarters, 800 Stevens Port Drive, Dakota Dunes, South Dakota 57049, on
September 28, 2001, at 9:00 a.m., local time. Tyson and Lasso own approximately
50.1% of the outstanding shares, and have agreed, pursuant to the merger
agreement among Tyson, Lasso and IBP, to vote the shares they own in favor of
the transaction. Tyson and Lasso acquired substantially all of their IBP shares
in the tender offer that was completed on August 3, 2001, as authorized by the
merger agreement.
This document is also the prospectus of Tyson for the shares of Class A
common stock that it will issue in connection with the merger. Shares of Tyson
Class A common stock are traded on the New York Stock Exchange under the symbol
"TSN."
This proxy statement/prospectus contains answers to frequently asked
questions (beginning on page 1); it also contains a summary description of the
merger and other related matters, followed by a more detailed discussion of the
merger and these matters. Because these answers and this summary are not, by
their nature, detailed, we urge you to read this proxy statement/prospectus in
its entirety. We encourage you to read the entire proxy statement/prospectus
carefully AND WE ESPECIALLY ENCOURAGE YOU TO READ THE SECTION ON "RISK FACTORS"
BEGINNING ON PAGE 17. In addition, you may obtain information about the two
companies from documents they have filed with the Securities and Exchange
Commission.
I join with our board of directors in recommending that you vote FOR the
merger.
IBP, INC.
/S/ ROBERT L. PETERSON
Robert L. Peterson
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE ISSUANCE OF TYSON CLASS A SHARES
OR THE MERGER, OR DETERMINED WHETHER THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROXY STATEMENT/PROSPECTUS IS DATED AUGUST 28, 2001 AND IS BEING FIRST
MAILED TO IBP'S STOCKHOLDERS ON OR ABOUT AUGUST 29, 2001.
[LOGO] ibp/R/
IBP, INC.
800 STEVENS PORT DRIVE
DAKOTA DUNES, SOUTH DAKOTA 57049
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 28, 2001
To the stockholders of IBP, inc.:
The IBP board of directors is pleased to provide you with notice of and
cordially invites you to attend in person or by proxy the special meeting of
IBP stockholders, which will be held at IBP World Headquarters, 800 Stevens
Port Drive, Dakota Dunes, South Dakota 57049, on September 28, 2001, at 9:00
a.m. local time, for the following purposes:
(1) to approve and adopt the agreement and plan of merger by and among
IBP, Tyson Foods, Inc. and Lasso Acquisition Corporation, a wholly owned
subsidiary of Tyson.
(2) to take action on such other business as may properly come before the
meeting.
Additional information about the proposals set forth above may be found in
the accompanying proxy statement/prospectus.
Only IBP stockholders as of the close of business on August 27, 2001 are
entitled to notice of and to vote at the special meeting or any postponements
or adjournments thereof.
THE IBP BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE BEST
INTERESTS OF IBP STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT IBP STOCKHOLDERS
VOTE TO APPROVE THE MERGER AGREEMENT DESCRIBED BEGINNING ON PAGE 53 OF THIS
PROXY STATEMENT/PROSPECTUS AT THE SPECIAL MEETING.
In connection with the special meeting, IBP stockholders may vote by proxy
by mail. To vote by mail, IBP stockholders should complete and return the
enclosed proxy form in the envelope provided, which requires no postage if
mailed in the United States. You may revoke your proxy at any time before the
vote is taken by delivering to the Secretary of IBP a written revocation or a
proxy with a later date or by oral revocation in person to any of the persons
named on the enclosed proxy card at the special meeting.
By Order of the Board of Directors,
/S/ SHEILA B. HAGEN
SHEILA B. HAGEN
SECRETARY
Dakota Dunes, South Dakota
August 28, 2001
PLEASE SIGN, DATE AND PROMPTLY RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE IN ORDER FOR YOUR SHARES TO BE REPRESENTED, WHETHER OR NOT YOU PLAN TO
ATTEND THE SPECIAL MEETING.
PLEASE DO NOT SEND STOCK CERTIFICATES WITH YOUR PROXY CARD.
ADDITIONAL INFORMATION
This document incorporates important business and financial information
about IBP and Tyson that is not included in or delivered with this document.
This information is available without charge to stockholders upon written or
oral request from the applicable company at the following addresses and
telephone numbers:
TYSON IBP
Director of Investor Relations Investor Relations Department, IBP, inc.
Tyson Foods, Inc. 800 Stevens Port Drive
2210 West Oaklawn Drive Dakota Dunes, South Dakota 57049
Springdale, Arkansas 72762-6999 Email: investor.relations@ibpinc.com
Email: tysonir@tyson.com (605) 235-2061
(501) 290-4000
TO OBTAIN TIMELY DELIVERY, STOCKHOLDERS MUST REQUEST THE INFORMATION NO
LATER THAN SEPTEMBER 21, 2001.
See "Where You Can Find More Information" on page 90.
TABLE OF CONTENTS
PAGE
----
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................................... 1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.................................. 5
SUMMARY.................................................................................... 6
The Companies........................................................................... 6
The Merger.............................................................................. 8
The Merger Agreement and Stipulation.................................................... 9
Market Price and Dividend Information................................................... 10
Unaudited Pro Forma Comparative Per Share Data.......................................... 12
Selected Financial Information.......................................................... 14
RISK FACTORS............................................................................... 17
INFORMATION ABOUT IBP...................................................................... 19
INFORMATION ABOUT TYSON.................................................................... 19
RECENT DEVELOPMENTS........................................................................ 20
THE SPECIAL MEETING........................................................................ 22
Date, Time and Place.................................................................... 22
Purpose................................................................................. 22
Record Date and Quorum Requirement...................................................... 22
Voting Procedures....................................................................... 22
Vote Required........................................................................... 23
Voting on Other Matters................................................................. 23
Proxy Solicitation...................................................................... 23
Required Approval of Tyson Stockholders................................................. 24
THE MERGER................................................................................. 25
General Description of the Merger....................................................... 25
Background.............................................................................. 25
IBP Reasons for the Merger; Recommendation of the IBP Board of Directors................ 33
Opinion of the Financial Advisor to the IBP Board....................................... 36
Engagement Letters...................................................................... 45
Effective Time of the Merger............................................................ 45
Certificate of Incorporation and Bylaws................................................. 45
Accounting Treatment.................................................................... 46
Regulatory Matters...................................................................... 46
Listing of the Shares of Tyson Class A Common Stock on the NYSE......................... 46
Resale of the Shares of Tyson Class A Common Stock Issued in the Merger; IBP Affiliates. 46
Interests of Certain Persons in the Merger.............................................. 47
Material Federal Income Tax Consequences of the Merger.................................. 48
Appraisal Rights........................................................................ 51
Plans for IBP........................................................................... 51
Exchange Procedures..................................................................... 51
THE MERGER AGREEMENT, STIPULATION AND VOTING AGREEMENT..................................... 53
The Merger Agreement.................................................................... 53
Recommendation...................................................................... 54
The Merger.......................................................................... 54
Employee Stock Options.............................................................. 55
Representations and Warranties...................................................... 55
Covenants of IBP.................................................................... 56
Covenants of Tyson.................................................................. 59
Mutual Covenants of Tyson and IBP................................................... 60
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PAGE
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Conditions to the Merger..................................................................... 61
Termination.................................................................................. 62
Fees and Expenses............................................................................ 63
Amendments................................................................................... 64
The Stipulation.................................................................................. 64
The Tender Offer............................................................................. 64
The Exchange Offer and the Cash Election Merger.............................................. 64
IBP Representations.......................................................................... 64
Termination Fee.............................................................................. 64
Covenant of Tyson............................................................................ 64
Covenants of IBP............................................................................. 65
Mutual Covenants of Tyson and IBP............................................................ 65
Termination.................................................................................. 65
Recommendation............................................................................... 65
Voting Agreement................................................................................. 66
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS......................................... 67
Security Ownership of Certain Beneficial Owners.................................................. 67
Security Ownership of Management................................................................. 67
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS REFLECTING
ACQUISITION OF 100% OF IBP, inc................................................................... 68
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS REFLECTING
TENDER OFFER FOR CASH OF 50.1% OF IBP, inc........................................................ 75
FORECASTS........................................................................................... 82
DESCRIPTION OF TYSON'S CAPITAL STOCK................................................................ 83
COMPARATIVE RIGHTS OF IBP STOCKHOLDERS AND TYSON STOCKHOLDERS....................................... 84
Summary of Material Differences Between the Rights of IBP Stockholders and the Rights of Tyson
Class A Common Stock Stockholders................................................................. 84
LEGAL MATTERS....................................................................................... 86
EXPERTS............................................................................................. 90
WHERE YOU CAN FIND MORE INFORMATION................................................................. 90
APPENDIX A Agreement and Plan of Merger, dated as of January 1, 2001, among IBP, inc., Tyson
Foods, Inc. and Lasso Acquisition Corporation............................................ A-1
APPENDIX B Stipulation and Order dated June 27, 2001, IBP, INC. V. TYSON FOODS, INC., C.A. No 18373,
Court of Chancery of the State of Delaware............................................... B-1
APPENDIX C Opinion of J.P. Morgan Securities Inc. dated June 26, 2001............................... C-1
APPENDIX D Opinion of J.P. Morgan Securities Inc. dated January 1, 2001............................. D-1
APPENDIX E Opinion of Peter J. Solomon Company Limited dated January 1, 2001........................ E-1
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q. WHAT WILL HAPPEN IN THE PROPOSED TRANSACTION?
A. IBP will become a direct, wholly owned subsidiary of Tyson by merging into
Lasso Acquisition Corporation, which is a wholly owned subsidiary of Tyson.
Lasso Acquisition Corporation is referred to in this proxy
statement/prospectus as "Purchaser."
Q. WHAT WILL IBP STOCKHOLDERS RECEIVE IN THE MERGER?
A. IBP stockholders will receive, in exchange for each of their IBP shares, a
number of Tyson Class A shares valued at $30.00, subject to limitations on
the maximum and minimum number of Tyson Class A shares to be issued. The
number of Tyson Class A shares to be exchanged for each IBP share will be
between 1.948 and 2.381, based on the average closing price of Tyson Class A
shares for the consecutive 15-trading-day period ending on the fifth trading
day before the effective time of the merger. This is referred to in this
proxy statement/prospectus as the exchange ratio. If the consecutive
15-trading-day average is greater than $15.40, IBP stockholders will
receive, for each IBP share, 1.948 shares of Tyson Class A common stock,
which will be worth more than $30.00 (based on the consecutive
15-trading-day average). If the 15-trading-day average is less than $12.60,
IBP stockholders will receive, for each IBP share, 2.381 shares of Tyson
Class A common stock, which will be worth less than $30.00 (based on the
consecutive 15-trading-day average).
The closing price of shares of Tyson Class A common stock was $10.26 on
August 27, 2001, the last full trading day before the date of this proxy
statement/prospectus. If that were the average per share price of Tyson
Class A common stock for the relevant consecutive 15-trading-day period, IBP
stockholders would receive 2.381 shares of Tyson Class A common stock with a
market value of $24.43 based on that average price in exchange for each
share of IBP common stock.
Please read the more detailed description of the consideration to be issued
in the merger on pages 53 to 54.
Q. HOW CAN I FIND OUT THE FINAL EXCHANGE RATIO?
A. Before the effective time of the merger, Tyson and IBP will notify you by
issuing a press release announcing the final exchange ratio.
Q. WILL AN IBP STOCKHOLDER RECEIVE ANY FRACTIONAL SHARES IN THE MERGER?
A. Tyson will not issue any fractional shares in the merger. Instead, you will
get cash for any fractional shares that you would otherwise receive.
Q. WHAT WILL HAPPEN TO MY STOCK OPTIONS?
A. At the effective time of the merger, all outstanding options to purchase IBP
shares will be converted into options to purchase Tyson Class A shares. Your
converted option will be exercisable for the number of shares of Tyson Class
A common stock that you would have received if you had exercised your IBP
options immediately prior to the merger. The exercise price for such options
will be determined by dividing the aggregate exercise price for your IBP
options by the number of Tyson Class A shares you would have received if you
had exercised your options prior to the merger.
Q. WHAT PERCENTAGE OF TYSON COMMON STOCK WILL IBP STOCKHOLDERS OWN AFTER THE
MERGER?
A. Tyson has both a Class A common stock and a Class B common stock. After
completion of the merger, former IBP stockholders would own between
approximately 32.3% and 36.8% of the outstanding shares of Tyson common
stock, based on a minimum exchange ratio of 1.948 and a maximum exchange
ratio of 2.381 Tyson Class A shares.
1
Q. WHAT VOTING PERCENTAGE OF TYSON COMMON STOCK WILL IBP STOCKHOLDERS HAVE
AFTER THE MERGER?
A. As of August 20, 2001, Tyson had 117,886,878 shares of Tyson Class A common
stock outstanding. Tyson also had 102,645,048 shares of Class B common stock
outstanding as of that date. Each share of Tyson Class B common stock has
the right to 10 votes, while each share of Tyson Class A common stock has
the right to one vote. Tyson Limited Partnership, which is controlled by Don
Tyson, Tyson's Senior Chairman, owns approximately 99.9% of the Tyson Class
B common stock, representing approximately 80.6% to 82.2% of the voting
power of Tyson common stock after giving effect to the merger. Therefore,
after completion of the merger, former IBP stockholders will control between
approximately 8.4% and 10.1% of the voting power of Tyson common stock,
depending upon the consecutive 15-trading-day average closing price.
Q. DIDN'T TYSON TERMINATE THE MERGER AGREEMENT?
A. On March 29, 2001, Tyson announced that it had terminated the merger
agreement on various grounds, including its belief that it had been
inappropriately induced into signing the merger agreement and its belief
that IBP had breached numerous representations and warranties made to Tyson
in the merger agreement. The Delaware Chancery Court ruled on June 15, 2001
that Tyson had not been inappropriately induced into signing the merger
agreement and that Tyson had improperly terminated the merger agreement, and
IBP's claim for specific performance of the merger agreement was granted.
Thereafter, on June 27, 2001, Tyson, Purchaser and IBP agreed to the
Stipulation and Order, which modified the merger agreement. Unless the
context indicates otherwise, references to the merger agreement in this
proxy statement/prospectus are to the merger agreement as modified by the
stipulation.
Q. DID TYSON COMPLETE THE TENDER OFFER?
A. Yes. Pursuant to the stipulation, Tyson and Purchaser commenced a tender
offer on July 3, 2001 for up to a number of IBP shares which, together with
the IBP shares already owned by Tyson, represents 50.1% of the outstanding
IBP shares. On August 3, 2001, Tyson completed the tender offer and now owns
approximately 50.1% of the outstanding IBP shares.
Q. WHAT PROPOSAL ARE THE IBP STOCKHOLDERS VOTING ON?
A. The IBP stockholders are voting on a proposal to approve the merger
agreement and the merger. For a more detailed description of the merger
proposal, see "The Merger" on pages 25 to 52.
Q. WHAT PERCENTAGE OF THE OUTSTANDING IBP SHARES MUST BE VOTED IN FAVOR OF THE
MERGER IN ORDER FOR THE MERGER PROPOSAL TO BE APPROVED?
A. The merger must be approved by the holders of a majority of the outstanding
IBP shares. Tyson and Purchaser, which own approximately 50.1% of the
outstanding IBP shares, have agreed, pursuant to the merger agreement, to
vote all of their IBP shares in favor of the merger. Consequently, the
necessary IBP stockholder approval is assured.
Q. WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A. We expect to complete the merger promptly after the special meeting.
Q. ARE TYSON STOCKHOLDERS VOTING ON THE MERGER AGREEMENT?
A. No. Under Delaware law, Tyson stockholders need not approve the merger
agreement. However, under the rules of the New York Stock Exchange, Inc.
(NYSE), the issuance of Tyson Class A shares in the merger requires
stockholder approval prior to such issuance. Holders of Tyson Class B 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 shares in the merger.
2
Q. HAS THE BOARD OF DIRECTORS OF IBP APPROVED THE MERGER AGREEMENT?
A. Yes. On January 1, 2001, the board of directors of IBP (referred to in this
proxy statement/prospectus as the "IBP Board"), based on the unanimous
recommendation of a special committee of the IBP Board (referred to in this
proxy statement/prospectus as the "Special Committee"), approved, by
unanimous vote, the terms set forth in the merger agreement and the
transactions contemplated therein, and recommended that IBP's stockholders
tender their shares in the tender offer and exchange offer, and vote to
approve the merger and the merger agreement. On January 1, 2001, the Special
Committee's financial advisors, J.P. Morgan Securities Inc. (JPMorgan) and
Peter J. Solomon Company Limited (PJSC) delivered their opinions to the
Special Committee that the consideration to be paid to IBP's stockholders in
the tender offer, exchange offer and the merger was fair from a financial
point of view. On June 26, 2001, the IBP Board approved, by unanimous vote
of those present, the terms of the stipulation modifying the merger
agreement, including eliminating the exchange offer. On June 26, 2001,
JPMorgan delivered its opinion to the IBP Board that the consideration to be
paid to IBP's stockholders in the tender offer and the merger is fair from a
financial point of view.
Q. WHY WAS THE SPECIAL COMMITTEE FORMED?
A. IBP had negotiated and entered into a merger agreement with Rawhide Holdings
Corporation, which is a company controlled by Donaldson, Lufkin & Jenrette.
In view of the role expected to be played by members of IBP's senior
management in the merger with Rawhide Holdings and the IBP Board's fiduciary
duty to explore the desirability of entertaining a proposal and informing
itself about other available alternatives, the IBP Board formed a Special
Committee consisting of directors with no financial interest in Rawhide
Holdings. This Special Committee was formed for the purpose of evaluating
the desirability of entertaining a proposal, determining whether to solicit
other third-party indications of interest and negotiating the price and
terms of any proposal. The Special Committee independently selected and
retained legal and financial advisors to assist it in its deliberations and
sought to achieve the best price and terms reasonably available for IBP's
stockholders. The Special Committee negotiated the terms of the merger
agreement among IBP, Tyson and Purchaser.
Q. WHAT DO I NEED TO DO NOW?
A. After you carefully read this document, please complete, sign, date and mail
your proxy card in the enclosed return envelope as soon as possible. That
way, your shares can be represented at the IBP stockholders' meeting. If you
have registrations in different names, you will receive a separate proxy
card for each name registration. If a broker holds your shares as nominee,
you will receive a voter-information form from your broker.
Q. AS AN IBP STOCKHOLDER, SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. No. After the merger is completed, you will receive written instructions
from Wilmington Trust Company, the exchange agent, on how to exchange your
IBP stock certificates for Tyson Class A stock certificates.
Q. WHAT HAPPENS IF I DO NOT INSTRUCT A BROKER HANDLING MY SHARES ON HOW TO VOTE
ON THE MERGER OR IF I ABSTAIN FROM VOTING?
A. If you are an IBP stockholder and a broker holds your IBP shares as nominee,
the broker will not be able to vote them with respect to the merger
agreement without instructions from you.
If you are an IBP stockholder and you mark your proxy "Abstain" or do not
instruct your broker on how to vote, this will have the effect of a vote
against the merger agreement.
3
Q. CAN I CHANGE MY VOTE AFTER I HAVE MAILED IN MY SIGNED AND DATED PROXY CARD?
A. Yes. You may revoke your proxy at any time before the special meeting by
delivering a written revocation or a proxy with a later date to the
Secretary of IBP at the following address: IBP, inc., 800 Stevens Port
Drive, Dakota Dunes, South Dakota 57049, Attention: Secretary. In the
alternative, you may revoke your proxy by voting in person at the special
meeting.
Q. WHOM SHOULD I CALL IF I HAVE ANY ADDITIONAL QUESTIONS OR WANT TO REQUEST A
COPY OF THIS DOCUMENT?
A. You may call IBP's Investor Relations Department, at (605) 235-2061, with
respect to questions regarding voting or to request a copy of this document.
Q. WHERE CAN I FIND MORE INFORMATION ABOUT TYSON AND IBP?
A. Various sources described under "Where You Can Find More Information" on
page 90 of this document provide further information.
4
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document contains some forward-looking statements that involve risks
and uncertainties. These statements may be made about the financial condition,
results of operations and business of Tyson and IBP. These statements may be
made directly in this document referring to Tyson or IBP, or may be
"incorporated by reference" from other documents filed with the Securities and
Exchange Commission (SEC). This document may also include statements relating
to the period following the completion of the merger. Generally, the words
"will," "may," "should," "continue," "believes," "expects," "intends,"
"anticipates" or similar expressions identify forward-looking statements.
These forward-looking statements involve certain risks and uncertainties.
Factors that could cause actual results to differ materially from those
contemplated by the forward-looking statements include, among others, the
following factors:
. the risk that Tyson and IBP will not successfully integrate their
combined operations;
. the risk that Tyson and IBP will not realize estimated synergies;
. unknown costs relating to the proposed transaction;
. risks associated with the availability and costs of financing, including
cost increases due to rising interest rates;
. fluctuations in the cost and availability of raw materials, such as feed
grain costs;
. the impact of weather on the supply and cost of raw materials;
. changes in availability and relative costs of labor and contract
growers;
. market conditions for finished products, including the supply and
pricing of alternative proteins;
. effectiveness of advertising and marketing programs;
. changes in regulations and laws, including changes in accounting
standards, environmental laws, and occupational, health and safety laws;
. access to foreign markets together with foreign economic conditions,
including currency fluctuations;
. the effect of, or changes in, general economic conditions; and
. adverse results from ongoing litigation.
You should not place undue reliance on the forward-looking statements, which
speak only as of the date of this document or, in the case of a document
incorporated by reference, the date of that document. See "Where You Can Find
More Information" on page 90.
The cautionary statements in this section expressly qualify, in their
entirety, all subsequent forward-looking statements attributable to Tyson, IBP
or any person acting on their behalf. While Tyson and IBP each has a
responsibility to make full and prompt disclosure of material facts regarding
its financial condition which may extend to situations where management knows
or has reason to know that previously disclosed projections no longer have a
reasonable basis, neither Tyson nor IBP otherwise undertakes any obligation to
release publicly any revisions to the forward-looking statements to reflect
events or circumstances occurring after the date of this document.
5
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION IN THIS DOCUMENT AND MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND THE
MERGER FULLY, AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE
MERGER, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND THE DOCUMENTS TO
WHICH WE HAVE REFERRED YOU. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE
90 OF THIS DOCUMENT. EACH ITEM IN THIS SUMMARY INCLUDES A PAGE REFERENCE
DIRECTING YOU TO A MORE COMPLETE DESCRIPTION OF THAT ITEM.
THE COMPANIES
IBP (SEE PAGE 19)
IBP, inc.
800 Stevens Port Drive
Dakota Dunes, South Dakota 57049
(605) 235-2061
IBP, a Delaware corporation, 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.
TYSON (SEE PAGES 19 AND 20)
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762-6999
(501) 290-4000
Tyson, a Delaware corporation, 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, foodservice 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.
6
LASSO ACQUISITION CORPORATION (SEE PAGE 20) Lasso Acquisition Corporation 2210
West Oaklawn Drive Springdale, Arkansas 72762-6999 (501) 290-4000
Purchaser, a Delaware corporation, has engaged in no activities other than
those incident to Purchaser's formation, the commencement of a tender offer for
the outstanding IBP shares, which terminated on February 28, 2001, the
commencement and consummation of a second tender offer which was completed on
August 3, 2001 and completion of the merger with IBP. Purchaser is a
wholly-owned subsidiary of Tyson.
THE SPECIAL MEETING (SEE PAGES 22 TO 24)
The special meeting will be held at IBP World Headquarters, 800 Stevens Port
Drive, Dakota Dunes, South Dakota 57049, on September 28, 2001, at 9:00 a.m.
Only IBP stockholders at the close of business on the record date, August 27,
2001, will be entitled to notice of and to vote at the special meeting. Each
IBP share carries one vote. As of the close of business on August 27, 2001,
108,234,296 IBP shares were outstanding.
TYSON OWNS 50.1% OF THE STOCK (SEE PAGE 21)
Tyson and Purchaser currently own 54,186,999 shares of IBP common stock
which constitute
approximately 50.1% of the outstanding IBP shares. Tyson and Purchaser acquired
substantially all of these shares in the tender offer that they completed as of
midnight, Eastern time, on August 3, 2001, as authorized by the merger
agreement.
VOTE REQUIRED TO APPROVE THE MERGER (SEE PAGE 23)
IBP stockholders will vote on a proposal to approve the merger. Approval of
the merger requires the affirmative vote of a majority of all outstanding
shares of IBP common stock entitled to vote. If an IBP stockholder does not
vote, whether by abstention or broker "non-vote," it will have the same effect
as a vote against the merger.
Tyson and Purchaser, which own approximately 50.1% of the outstanding IBP
shares, have agreed, pursuant to the merger agreement, to vote all of their IBP
shares in favor of the merger. Consequently, the necessary IBP stockholder
approval is assured.
IBP SHARE OWNERSHIP OF MANAGEMENT (SEE PAGE 67)
Executive officers and directors of IBP and their affiliates owned, as of
August 20, 2001, approximately 50.6% of the outstanding IBP shares (including
the 54,186,999 IBP shares over which Don Tyson, Senior Chairman of Tyson and
director of IBP, has shared investment and voting power). It is expected that
all of these executive officers and directors will vote the shares they own on
the record date FOR the approval of the merger agreement.
RISK FACTORS (SEE PAGES 17 AND 18)
You should be aware that:
. if the average closing price of Tyson Class A common stock is less than
$12.60, you could receive less than $30.00 of Tyson Class A common
stock. The closing price of shares of Tyson Class A common stock was
$10.26 on August 27, 2001, the last full trading day before the date of
this proxy statement/prospectus. If that were the average per share
price of Tyson Class A common stock during the relevant consecutive
15-trading-day period, IBP stockholders would receive 2.381 shares of
Tyson Class A common stock with a market value of $24.43 based on that
average price in exchange for each share of IBP common stock;
. if the merger fails to be treated as a "reorganization" for federal
income tax purposes, the merger will be a taxable transaction to you;
. there can be no assurance that Tyson will be able to integrate the
operations of Tyson and IBP successfully;
. the principal stockholder of Tyson has, and following the merger will
continue to have, the ability to elect the entire board of directors of
Tyson without the vote of any holder of Tyson Class A common stock; and
. the factors which affect Tyson's business and the trading price of Tyson
Class A shares may be different from the factors affecting IBP's
business and the trading price of IBP shares.
7
THE MERGER
RECOMMENDATION TO IBP STOCKHOLDERS (SEE PAGES 33 TO 36)
The IBP Board has determined that the merger is in the best interests of the
IBP stockholders and unanimously recommends that IBP stockholders vote FOR the
merger agreement and the merger at the special meeting.
FAIRNESS OPINION (SEE PAGES 36 TO 45)
In deciding to approve the merger, the IBP Board considered, among other
things, the opinion of its financial advisor, JPMorgan, dated June 26, 2001, as
to the fairness, from a financial point of view, of the consideration that IBP
stockholders will receive. This opinion is attached as Appendix C to this
document.
ACCOUNTING TREATMENT (SEE PAGE 46)
The merger will be accounted for using the purchase method of accounting for
business combinations in accordance with accounting principles generally
accepted in the United States.
REGULATORY APPROVALS (SEE PAGE 46)
All regulatory approvals required to complete the merger have been obtained.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (SEE PAGES 47 TO 48)
In considering the recommendation of the IBP Board, you should be aware that
certain of IBP's officers and directors have interests in the merger or have
certain relationships, including those referred to below, that present actual
or potential, or the appearance of actual or potential, conflicts of interest
in connection with the merger, including:
. the interest of certain officers and directors in stock options that
will convert into options of Tyson Class A common stock upon completion
of the merger; and
. the obligation of Tyson to cause the surviving corporation to continue
to provide certain employee benefits, indemnification and related
insurance coverage to directors and officers of IBP following the
merger.
The members of the IBP Board knew about these additional interests and
considered them when they approved the merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES (SEE PAGES 48 TO 50)
The U.S. federal income tax consequences of the merger to you will depend on
the form of consideration you receive in the merger and the tender offer. If
you did not tender any of your IBP shares in the tender offer and you do
receive solely Tyson Class A shares for your IBP shares, you will not recognize
any gain or loss for U.S. federal income tax purposes (except with respect to
cash received instead of fractional shares). If you receive part cash (in the
tender offer) and part Tyson Class A shares (in the merger), and your adjusted
basis in your IBP shares is less than the sum of the amount of cash and the
fair market value (as of the date of the merger) of the Tyson Class A shares
you receive, you will recognize a gain. However, if you realize a loss because
your adjusted basis in your IBP shares is greater than the sum of the amount of
cash and the fair market value, as of the date of the merger, of the Tyson
Class A shares you receive, the loss will not currently be allowed.
The consequences described above assume that the tender offer and the
merger, taken together, will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code.
RIGHTS OF APPRAISAL FOR IBP STOCKHOLDERS (SEE PAGE 51)
Appraisal rights will not be available to IBP stockholders in connection
with the merger if IBP shares continue to be listed on the NYSE on the record
date of the special meeting and Tyson Class A common stock continues to be
listed on the NYSE at the effective time of the merger. Neither Tyson nor IBP
has any reason to believe that its shares will not be listed on the NYSE at any
time prior to the effective time.
IBP STOCK CERTIFICATES WILL BE EXCHANGED LATER FOR TYSON STOCK CERTIFICATES
(SEE PAGES 51 AND 52)
After the merger occurs, Wilmington Trust Company will send a letter of
transmittal to IBP stockholders that will provide instructions on the procedure
for exchanging IBP stock certificates for Tyson stock certificates.
8
THE MERGER AGREEMENT AND STIPULATION (SEE PAGES 53 TO 65)
The merger agreement and stipulation are the legal documents that govern the
merger. The merger agreement is attached as Appendix A to this document, and
the stipulation is attached as Appendix B to this document. We encourage you to
read these carefully.
CONVERSION OF IBP SHARES (SEE PAGES 53 AND 54)
In the merger, IBP stockholders will receive a number of Tyson Class A
shares in return for their IBP shares.
Specifically, in exchange for each of their IBP shares, IBP stockholders
will receive a number of Tyson Class A shares having a value of $30.00 if,
during the consecutive 15-trading-day period ending on the fifth trading day
immediately preceding the effective time of the merger, the average per share
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, then each IBP share outstanding immediately prior to the effective time
of the merger will be exchanged for 2.381 shares of Tyson Class A common stock.
If the average per share price of Tyson Class A common stock is more than
$15.40, then each IBP share outstanding immediately prior to the effective time
of the merger will be exchanged for 1.948 shares of Tyson Class A common stock.
The closing price of shares of Tyson Class A common stock was $10.26 on
August 27, 2001, the last full trading day before the date of this proxy
statement/prospectus. If that is the average per share price of Tyson Class A
common stock during the relevant consecutive 15-trading-day period, IBP
stockholders would receive 2.381 shares of Tyson Class A common stock with a
market value of $24.43 based on that average price in exchange for each share
of IBP common stock.
CONDITIONS TO THE MERGER (SEE PAGES 61 AND 62)
Completion of the merger depends upon the satisfaction of a number of
conditions. In addition to customary conditions relating to each of us
complying with the merger agreement, the conditions are as follows:
. approval of the merger agreement by IBP stockholders;
. absence of any injunction or other legal restraint blocking the merger,
or of any applicable federal or state law or regulation prohibiting the
merger;
. the SEC declaring effective, and the absence of a suspension by the SEC
of the effectiveness of, the registration statement with respect to the
Tyson Class A shares to be issued in the merger; and
. the NYSE approving for listing the Tyson Class A shares to be issued in
the merger.
The merger will occur, and your IBP shares will be converted into the right to
receive Tyson Class A shares as soon as practicable after all of the conditions
in the merger agreement are satisfied.
COMPARATIVE RIGHTS OF IBP STOCKHOLDERS AND TYSON STOCKHOLDERS (SEE PAGES 84 TO
85)
Tyson and IBP are both organized under the laws of the State of Delaware.
Any differences, therefore, in the rights of holders of IBP shares and Tyson
Class A shares arise exclusively from the differences in their respective
certificates of incorporation and bylaws. Your rights as a Tyson Class A
stockholder will be governed by Tyson's certificate of incorporation and
bylaws. These rights differ in certain respects from the current IBP
stockholder rights, which are governed by IBP's certificate of incorporation
and bylaws.
In addition, the voting rights of holders of Tyson Class A shares are
different from the voting rights of the holders of Tyson Class B shares.
Holders of Tyson Class A shares are entitled to one vote per share whereas
holders of Tyson Class B shares are entitled to ten votes per shares. Tyson
Limited Partnership, which is controlled by Don Tyson, Tyson's Senior Chairman,
owns 99.9% of the outstanding Class B shares, which would represent
approximately between 80.6% to 82.2% of the voting power of Tyson after giving
effect to the merger.
9
MARKET PRICE AND DIVIDEND INFORMATION
Tyson Class A shares are listed and traded on the NYSE under the symbol
"TSN". IBP shares are listed and traded on the NYSE under the symbol "IBP".
The following table provides trading and dividend information for Tyson
Class A shares and for IBP shares for the periods indicated based on a calendar
year. All of the prices set forth in this section and the next section are as
reported on the NYSE on the Consolidated Tape, Network A at the end of the
regular session.
TYSON CLASS A SHARES IBP SHARES
--------------------------- -----------------------
CASH CASH
DIVIDENDS DIVIDENDS
PER TYSON PER IBP
HIGH LOW CLASS A SHARE HIGH LOW SHARE
------ ------ ------------- ------ ------ ---------
1999
First Quarter.......................... $22.13 $18.56 $0.04 $29.31 $19.38 $0.025
Second Quarter......................... 23.75 18.94 0.04 23.88 16.75 0.025
Third Quarter.......................... 23.50 14.88 0.04 25.56 22.00 0.025
Fourth Quarter......................... 18.13 15.13 0.04 25.38 17.75 0.025
2000
First Quarter.......................... 17.38 8.50 0.04 18.50 11.00 0.025
Second Quarter......................... 11.38 8.50 0.04 18.88 13.19 0.025
Third Quarter.......................... 10.00 8.75 0.04 17.94 14.00 0.025
Fourth Quarter......................... 14.63 9.69 0.04 26.94 17.25 0.025
2001
First Quarter.......................... 14.06 10.63 0.04 29.31 15.00 0.025
Second Quarter......................... 14.20 8.55 0.04 25.30 14.50 0.025
Third Quarter (through August 27, 2001) 11.19 9.20 -- 27.45 23.80 0.025
The following table shows the high, low and closing prices for IBP shares
and Tyson Class A shares on December 29, 2000, the last full trading day before
the public announcement of the proposed transaction, on June 15, 2001, the last
full trading day before the announcement of the Delaware Chancery Court's
opinion requiring specific performance of the merger agreement, on June 26,
2001, the last full trading day before the announcement of the stipulation, and
on August 27, 2001, the most recent date for which quotations were available
prior to the printing of this document.
TYSON CLASS A SHARES IBP SHARES
-------------------- ---------------------
DATE HIGH LOW CLOSE HIGH LOW CLOSE
---- ------ ----- ----- ------- ------- -----
December 29, 2000 12.875 12.25 12.75 26.9375 26.3125 26.75
June 15, 2001.... 11.41 11.31 11.38 18.60 18.10 18.27
June 26, 2001.... 9.30 8.85 8.89 23.26 22.90 23.01
August 27, 2001.. 10.35 10.18 10.26 24.49 24.10 24.40
The number of Tyson Class A shares to be exchanged for each IBP share in the
merger will depend on the average closing price of Tyson Class A shares for the
consecutive 15-trading-day period ending on the fifth trading day before the
effective time of the merger. If the average closing price were the same as the
closing price of Tyson Class A shares on August 27, 2001, each IBP share would
be converted into the right to receive 2.381 shares of Tyson Class A
common stock with a market value of $ 24.43 based on that average price.
We urge you to obtain current market quotations for Tyson Class A shares and
IBP shares.
10
On May 4, 2001, the Tyson board of directors declared a dividend on Tyson
Class A shares of $0.04 per share, payable on September 15, 2001, to holders of
record on September 1, 2001. Additionally, on August 3, 2001, the Tyson board
of directors declared a dividend on Tyson Class A shares of $0.04 per share,
payable on December 15, 2001, to holders of record on December 1, 2001. Tyson
anticipates that it will continue to pay quarterly cash dividends. The Tyson
board of directors, however, has discretion to decide upon the timing and
amount of any future dividends. Whether or not Tyson will pay dividends, and,
if so, how much these dividends will be, will depend on Tyson's future
earnings, financial condition, capital requirements and other factors. As part
of the stipulation, Tyson agreed that it will not make, declare or pay any
dividend or distribution on the shares of Tyson Class A common stock, other
than regular quarterly dividends on the Tyson Class A shares.
On May 31, 2001, the IBP Board declared a dividend on IBP shares of $0.025
per share, payable on July 16, 2001, to holders of record on June 15, 2001. As
part of the merger agreement, IBP has agreed that it will not make, declare or
pay any dividend or distribution on IBP shares, other than regular quarterly
dividends on IBP shares.
11
UNAUDITED PRO FORMA 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
document 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. See "The Merger Agreement, Stipulation and Voting
Agreement--The Merger Agreement."
The Tyson pro forma data was prepared by combining the unaudited historical
consolidated financial information of Tyson and IBP using the purchase method
of accounting for business combinations in accordance with accounting
principles generally accepted in the U.S.
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 in the merger. The remaining 50.1%
of IBP shares were purchased by Tyson for cash pursuant to the tender 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.
The information in the table below should be read in conjunction with the
historical financial statements referred to in the sections captioned "Selected
Financial Data" of each of Tyson and IBP.
Tyson Historical Per Share (Thirty-nine weeks ended and as of June 30,
2001)
Earnings per share
Basic............................................................... $ 0.18
Diluted............................................................. 0.18
Cash Dividends
Class A............................................................. 0.120
Class B............................................................. 0.108
Book Value........................................................... 9.70
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
12
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 (Twenty-six weeks ended and as of June 30, 2001)
Earnings per share before accounting change and extraordinary loss
Basic...................................................................... $ 0.59
Diluted.................................................................... 0.58
Cash Dividends............................................................... 0.05
Book Value................................................................... 17.99
ASSUMED
EXCHANGE RATIO OF
-----------------
2.381 1.948
------ ------
Tyson/IBP Historical Pro Forma Per Share (Thirty-nine weeks ended
and as of June 30, 2001)
Earnings per share before accounting change and extraordinary
loss
Basic........................................................... $ 0.12 $ 0.13
Diluted......................................................... 0.12 0.12
Cash dividends:
Class A......................................................... 0.063 0.068
Class B......................................................... 0.108 0.108
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........................................................... $ 0.88 $ 0.94
Diluted......................................................... 0.87 0.94
Cash dividends:
Class A......................................................... 0.084 0.090
Class B......................................................... 0.144 0.144
Unaudited Equivalent Historical Pro Forma Per Share for IBP
(Thirty-nine weeks ended and as of June 30, 2001)
Earnings per share before accounting change and extraordinary
loss
Basic........................................................... $ 0.14 $ 0.13
Diluted......................................................... 0.14 0.12
Cash dividends................................................... 0.075 0.066
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........................................................... $ 1.05 $ 0.91
Diluted......................................................... 1.03 0.91
Cash dividends................................................... 0.100 0.087
13
SELECTED FINANCIAL INFORMATION
The following tables present (1) selected consolidated financial information
for each of Tyson and IBP on a historical basis; and (2) selected unaudited pro
forma financial data for Tyson reflecting the merger with IBP.
We prepared the selected unaudited pro forma financial data by accounting
for the merger with IBP under the purchase method of accounting. See "The
Merger--Accounting Treatment." The selected unaudited pro forma financial data
reflect the merger with IBP based upon preliminary purchase accounting
adjustments. Actual amounts may differ from those reflected below.
The selected historical financial data set forth below (x) for Tyson for (a)
the fiscal years ended as of September 30, 2000, October 2, 1999, October 3,
1998, September 27, 1997 and September 28, 1996 and the nine months ended as of
June 30, 2001 and July 1, 2000, and (b) for each of the 52-week periods in the
five-year period ended September 30, 2000 and for each of the nine month
periods ended June 30, 2001 and July 1, 2000 and (y) for IBP for (i) the fiscal
years ended as of December 30, 2000, December 25, 1999, December 26, 1998,
December 27, 1997 and December 28, 1996 and the twenty-six weeks ended as of
June 30, 2001 and June 24, 2000, and (ii) for each of the fiscal years in the
five-year period ended December 30, 2000 and the twenty-six week periods ended
June 30, 2001 and June 24, 2000, have been derived from Tyson's and IBP's
audited and unaudited financial statements. The unaudited selected historical
financial data set forth below for (a) Tyson for the thirty-nine weeks ended
July 1, 2000 and June 30, 2001 and (b) (1) IBP for the twenty-six weeks ended
June 24, 2000 and June 30, 2001, (2) the balance sheet data for December 27,
1997 and December 28, 1996, and the statement of operations data for the year
ended December 28, 1996, have been derived from Tyson's and IBP's unaudited
financial statements and, in the opinion of their managements, include all
adjustments, consisting of normal recurring adjustments, necessary for fair
presentations of the data of these periods. You should read the information set
forth below in conjunction with the respective audited and unaudited financial
statements of Tyson and IBP incorporated by reference in this document and the
unaudited pro forma combined financial statements and related notes presented
elsewhere in this document. See "Where You Can Find More Information" and
"Unaudited Pro Forma Combined Condensed Financial Statements."
The pro forma balance sheet data give effect to the merger as if this event
occurred as of the balance sheet date; the pro forma statement of income data
gives effect to the merger as if this event occurred on October 3, 1999. The
pro forma financial data are not, however, necessarily indicative of the
financial position or operating results that would have occurred had the merger
been completed on those dates; nor is the information necessarily indicative of
future financial position or operating results.
14
TYSON SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
39 WEEKS ENDED
(UNAUDITED) 52/53 WEEKS ENDED
---------------- ---------------------------------------------
JUNE 30, JULY 1, SEPT. 30, OCT. 2, OCT. 3, SEPT. 27, SEPT. 28,
2001 2000 2000 1999 1998 1997 1996
-------- ------- --------- ------- ------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS:
Operating revenues....................... $5,465 $5,377 $7,158 $7,363 $7,414 $6,356 $6,454
Net income............................... 40 133 151 230 25 186 87
Earnings per share, basic................ 0.18 0.59 0.67 1.00 0.11 0.86 0.40
Earnings per share, diluted.............. 0.18 0.59 0.67 1.00 0.11 0.85 0.40
Cash dividends declared per common share:
Class A............................... 0.120 0.120 0.160 0.115 0.100 0.095 0.080
Class B............................... 0.108 0.108 0.144 0.104 0.090 0.086 0.072
(UNAUDITED)
----------------
JUNE 30, JULY 1, SEPT. 30, OCT. 2, OCT. 3, SEPT. 27, SEPT. 28,
2001 2000 2000 1999 1998 1997 1996
-------- ------- --------- ------- ------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA:
Total assets................... $4,989 $4,898 $4,854 $5,083 $5,242 $4,411 $4,544
Long-term debt, capital leases
and redeemable preferred stock
(excluding current portion)... 1,614 1,459 1,357 1,515 1,967 1,558 1,806
Shareholders' equity........... 2,145 2,169 2,175 2,128 1,970 1,621 1,542
Book value per share........... 9.70 10.16 9.67 9.31 8.53 7.60 7.09
IBP SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
26 WEEKS ENDED
(UNAUDITED) FISCAL YEAR ENDED
----------------- --------------------------------------------
RESTATED RESTATED RESTATED RESTATED RESTATED
JUNE 30, JUNE 24, DEC. 30, DEC. 25, DEC. 26, DEC. 27, DEC. 28,
2001 2000 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS:
Operating revenues............. $8,486 $8,224 $16,950 $15,122 $13,735 $13,881 $12,951
Net income before accounting
change and extraordinary items 62 80 153 318 198 122 198
Earnings per share before
accounting change and
extraordinary items, basic.... 0.59 0.73 1.41 3.26 2.02 1.26 2.09
Earnings per share before
accounting change and
extraordinary items, diluted.. 0.58 0.72 1.40 2.96 1.86 1.20 2.06
Cash dividends declared per
common share.................. 0.05 0.05 0.10 0.10 0.10 0.10 0.10
(UNAUDITED)
-----------------
RESTATED RESTATED RESTATED RESTATED RESTATED
JUNE 30, JUNE 24, DEC. 30, DEC. 25, DEC. 26, DEC. 27, DEC. 28,
2001 2000 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA:
Total assets................... $4,652 $4,373 $4,426 $4,144 $3,313 $2,972 $2,174
Long-term debt, capital leases
and redeemable preferred stock
(excluding current portion)... 688 660 659 790 761 635 260
Stockholders' equity........... 1,912 1,755 1,850 1,700 1,391 1,236 1,194
Book value per share........... 17.99 16.62 17.50 17.59 14.40 12.76 12.62
15
TYSON AND IBP SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
INFORMATION
The pro forma earnings per share before accounting changes and extraordinary
items for basic and diluted are based upon 350.2 million weighted average
shares outstanding of 350.2 million and 352.2 million basic and diluted,
respectively, for the 39 weeks ended June 30, 2001, assuming the conversion of
49.9% of all IBP shares into 2.381 Tyson shares per IBP share and the purchase
of 50.1% of all IBP shares for cash.
The pro forma earnings per share before accounting changes and extraordinary
items are based on average shares outstanding of 354 million and 357.2 million
basic and diluted, respectively, for the fiscal year ended September 30, 2000,
assuming the conversion of 49.9% of all IBP shares into 2.381 Tyson shares per
IBP share and the purchase of 50.1% of all IBP shares for cash.
39 WEEKS ENDED FISCAL YEAR
JUNE 30, ENDED SEPTEMBER 30,
-------------- -------------------
2001 2000
-------------- -------------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS:
Operating revenues....................................................... $18,362 $23,832
Net income before accounting changes and extraordinary loss.............. 41 312
Basic earnings before accounting changes and extraordinary loss per share
Basic................................................................. 0.12 0.88
Diluted............................................................... 0.12 0.87
Cash dividends declared per common share:
Class A............................................................... 0.063 0.084
Class B............................................................... 0.108 0.144
JUNE 30, SEPTEMBER 30,
-------- -------------
2001 2000
-------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA:
Total assets.......................... $10,636 $10,331
Long-term debt, capital leases and
redeemable preferred stock
(excluding current portion)......... 4,010 3,796
Common stock equity................... 3,342 3,372
Book value per share.................. 9.54 9.53
16
RISK FACTORS
IN CONSIDERING WHETHER TO VOTE IN FAVOR OF THE MERGER AGREEMENT, YOU SHOULD
CONSIDER ALL THE INFORMATION WE HAVE INCLUDED IN THIS PROXY
STATEMENT/PROSPECTUS AND ITS APPENDICES AND ALL THE INFORMATION INCLUDED IN THE
DOCUMENTS WE HAVE INCORPORATED BY REFERENCE. IN ADDITION, YOU SHOULD PAY
PARTICULAR ATTENTION TO THE FOLLOWING RISK FACTORS RELATED TO THE MERGER AND TO
OUR COMPANIES. THESE FACTORS ARE IMPORTANT, AND WE HAVE NOT BEEN ABLE TO
QUANTIFY THEIR POTENTIAL EFFECTS ON THE COMBINED COMPANY THAT WILL RESULT FROM
THE MERGER.
YOU WILL RECEIVE LESS THAN $30.00 OF TYSON CLASS A COMMON STOCK UNLESS THE
AVERAGE CLOSING PRICE OF TYSON CLASS A COMMON STOCK IS EQUAL TO OR MORE THAN
$12.60
If the average closing price for the consecutive 15 trading days ending on
the fifth trading day prior to the effective time of the merger is less than
$12.60, the exchange ratio for the number of shares of Tyson Class A common
stock you will receive in the merger will be fixed at 2.381 shares of Tyson
Class A common stock for each IBP share. If the 15-trading-day average price is
less than $12.60, the 2.381 shares of Tyson Class A common stock will not be
adjusted in the event of any decrease in the price of Tyson Class A common
stock. The consecutive 15-trading-day average price may vary from the price of
a share of Tyson Class A common stock at the time this proxy
statement/prospectus is delivered to you and at the time IBP shares are
exchanged for Tyson Class A shares in the merger. The closing price per share
of Tyson Class A common stock was $10.26 on August 27, 2001, the last full
trading day before the date of this proxy statement/prospectus. If that were
the average per share price of Tyson Class A common stock during the relevant
consecutive 15-trading-day period, IBP stockholders would receive 2.381 shares
of Tyson Class A common stock with a market value of $23.43 based on that
average price in exchange for each share of IBP common stock.
THE MERGER MAY BE A TAXABLE TRANSACTION FOR FEDERAL INCOME TAX PURPOSES
If the merger is consummated but fails to be treated as part of a
"reorganization" for federal income tax purposes, the merger will be a taxable
transaction. The merger would fail to be treated as part of a "reorganization"
if the aggregate fair market value of the Tyson Class A common stock delivered
as consideration for the IBP shares in the merger failed to exceed a minimum
percentage, approximately 40 percent under one United States Supreme Court
case, of the aggregate fair market value of the cash and Tyson Class A common
stock delivered as consideration for all IBP shares in the tender offer and
merger. In addition, Tyson and IBP may agree, under Section 12.03(c) of the
merger agreement, to cause Purchaser to merge into IBP, instead of having IBP
merge into Purchaser. That change in the direction of the merger would prevent
the merger from being treated as part of a reorganization within the meaning of
Section 368(a) of the Code. In the event that the merger is consummated but
fails to be treated as part of a "reorganization," each holder of IBP shares
that exchanges IBP shares for Tyson Class A common stock in the merger will
generally recognize gain or loss measured by the difference between the fair
market value of Tyson Class A common stock received in the merger (together
with any cash received in lieu of fractional shares) and such stockholder's
adjusted tax basis in the IBP shares exchanged in the merger. In addition, if
the merger is consummated as currently described in the merger agreement--as a
merger of IBP into Purchaser with the Purchaser as the surviving
corporation--the merger would be taxable to IBP, as well as IBP stockholders,
resulting in a corporate level tax on IBP's gain, measured by the difference
between the fair market value of IBP's assets and IBP's basis in such assets.
Tyson and IBP may elect, however, pursuant to Section 12.03(c) of the merger
agreement, to amend the merger agreement and require Purchaser to merge into
IBP with IBP the surviving corporation in the merger. If that election is made,
the corporate level tax would not apply, but the merger would be taxable to IBP
stockholders.
UNCERTAINTIES IN INTEGRATING THE TWO COMPANIES
The merger of the two companies will require the integration of companies
that have previously operated independently. No assurance can be given that
Tyson will be able to integrate the operations of IBP and its subsidiaries
without encountering difficulties or experiencing the loss of key employees,
customers or suppliers. The management of each company will have to dedicate
substantial time and effort to ensure that this integration proceeds
successfully.
17
TYSON IS CONTROLLED BY ONE STOCKHOLDER
As of August 20, 2001, Don Tyson, Senior Chairman of the board of directors
of Tyson, and the Tyson Limited Partnership, of which Don Tyson is managing
general partner, together owned, directly or indirectly, 102,598,560 shares of
Tyson Class B common stock. Except as provided under Delaware law, in all
matters on which holders of Tyson common stock vote, the holders of Class A
common stock and the holders of Class B common stock vote as a single class.
Tyson Class B common stock has ten votes per share and Tyson Class A common
stock has one vote per share. Tyson Class B common stock currently represents
approximately 90% of the voting power of Tyson common stock. Following the
merger, Tyson Class B common stock will represent between approximately 80.6%
to 82.2% of the voting power of Tyson Class A common stock and Tyson Class B
common stock taken together. This assumes the issuance of between 105,134,881
and 128,504,184 shares of Tyson Class A common stock in the merger, depending
upon the actual consecutive 15-trading-day average closing price of Tyson Class
A common stock used in connection with the merger. Consequently, Don Tyson,
individually and in his capacity as managing general partner of the Tyson
Limited Partnership, will have the ability to elect the entire Tyson board of
directors without the vote of any holder of Tyson Class A common stock. In
addition, Don Tyson's voting power could have the effect of precluding a proxy
contest, a business combination involving Tyson or a tender offer for Tyson
Class A common stock that could give the holders of Tyson Class A common stock
the opportunity to realize a premium over the then-prevailing market price for
their shares of Tyson Class A common stock.
THE BUSINESS OF THE COMBINED COMPANY AND THE TRADING PRICE OF TYSON CLASS A
COMMON STOCK MAY BE AFFECTED BY FACTORS DIFFERENT FROM THOSE WHICH AFFECT THE
BUSINESS OF IBP AND THE TRADING PRICE OF IBP COMMON STOCK, AND THE VALUE OF
TYSON CLASS A COMMON STOCK MAY DECLINE FOR REASONS NOT ANTICIPATED BY IBP
STOCKHOLDERS.
After the merger, IBP's business will be integrated into Tyson's business.
After the merger, the combined company's business will be more diversified than
that of IBP and the combined company's results of operations, as well as the
trading price of Tyson Class A common stock, may be affected by factors
different from those affecting IBP's results of operations and the price of IBP
common stock. The value of Tyson's Class A common stock may decline for reasons
not anticipated by IBP stockholders. For a discussion of Tyson's and IBP's
businesses and information to consider in connection with these businesses, see
Tyson's Annual Report on Form 10-K for the fiscal year ended September 30, 2000
and Tyson's Quarterly Report on Form 10-Q for the nine months ended June 30,
2001, and IBP's Annual Report on Form 10-K for the fiscal year ended December
30, 2000 and IBP's Quarterly Report on Form 10-Q for the twenty-six weeks ended
June 30, 2001, which are incorporated by reference into this proxy
statement/prospectus.
18
INFORMATION ABOUT IBP
GENERAL
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.
MANAGEMENT AND ADDITIONAL INFORMATION
IBP's Annual Report on Form 10-K for the year ended December 30, 2000
incorporates by reference or sets forth information relating to executive
compensation; various benefit plans, including stock option plans; voting
securities and their principal holders; various relationships; related
transactions and other related matters pertaining to IBP. IBP incorporates this
Annual Report on Form 10-K into this proxy statement/prospectus by reference.
If you would like copies of this document, you may contact IBP at the address
or telephone number indicated under "Where You Can Find More Information."
INFORMATION ABOUT TYSON
GENERAL
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, foodservice 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.
19
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
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 a previous tender
offer for the outstanding IBP shares, which terminated on February 28, 2001,
the commencement and completion of a second tender offer completed on August 3,
2001 and completion of the merger with IBP. Purchaser is a wholly-owned
subsidiary of Tyson.
MANAGEMENT AND ADDITIONAL INFORMATION
Tyson's Annual Report on Form 10-K for the year ended September 30, 2000
incorporates by reference or sets forth information relating to executive
compensation; various benefit plans, including stock option plans; voting
securities and their principal holders; various relationships; related
transactions and other related matters pertaining to Tyson. Tyson incorporates
this Annual Report on Form 10-K into this proxy statement/prospectus by
reference. If you would like copies of this document, you may contact Tyson at
the address or telephone number indicated under "Where You Can Find More
Information."
RECENT DEVELOPMENTS
On August 7, 2001, Tyson provided an update on the IBP acquisition,
announcing the following:
. Earnings per share for the combined company in fiscal year 2002 are
expected to be in the range of $0.90 to $1.00, including synergies.
Synergies are expected to be $50 million in the first full year,
increasing to $200 million within three years.
. Greg W. Lee, Tyson's Chief Operating Officer, and Richard L. Bond, IBP's
Chief Operating Officer, would be the Co-Chief Operating Officers of the
combined company. Steve Hankins, Tyson's Chief Financial Officer, would
be the Chief Financial Officer of the combined company. Les Baledge,
Tyson's General Counsel, would be the General Counsel of the combined
company.
. Robert L. Peterson, IBP's Chairman and Chief Executive Officer, would
retire from active management, but would remain involved with the
combined company as a member of Tyson's board of directors.
20
Effective as of August 6, 2001, Martin Massengale, Wendy Gramm, John
Jacobson and Eugene Leman resigned from the IBP Board. Effective as of August
6, 2001, John Tyson, Tyson's Chairman and Chief Executive Officer, Don Tyson,
Tyson's Senior Chairman, Greg Lee, Les R. Baledge and Steve Hankins were
appointed to the IBP Board.
On August 10, 2001, Tyson issued a press release announcing the final
results of the tender offer. 105,341,969 shares of IBP common stock,
representing approximately 97.4% of the total outstanding IBP shares, had been
tendered and not withdrawn prior to the expiration of the tender offer. Tyson
announced that it would be purchasing 53,612,799 of the tendered IBP shares,
after which it and Purchaser would own approximately 50.1% of the outstanding
IBP shares.
On August 15, 2001, Tyson issued a press release announcing further
information regarding the structure of the combined company going forward, and
the process to be taken in integrating the acquisition of IBP. The combined
company's channel structure will consist of two primary marketing groups: a
Foodservice and International Group, to be led by Co-COO and Group President
Greg W. Lee, and a Fresh Meats and Retail Group, to be headed by Co-COO and
Group President Richard L. Bond. The management responsibility of the Shared
Services groups, which are support services common across all sales channels,
will be assigned to either Mr. Bond, Mr. Lee, Chief Financial Officer Steve
Hankins or John Tyson. Other management decisions announced included the
following:
. Eugene D. Leman, currently the head of the Fresh Meats Division at IBP
will remain in that capacity and report to Mr. Bond. John S. Lea,
currently the Chief Marketing Officer for Tyson, has been selected to
head the Grocery Channel and will report to Mr. Bond. Mr. Bond will also
have oversight of all warehousing, supply chain and transportation for
the new company. Donnie Smith, the Executive Vice President of Supply
Chain Management for Tyson, will head this initiative.
. Bill Lovette, currently President of Foodservice at Tyson, will head the
Foodservice Poultry Channel and report to Mr. Lee. Don Rea, currently
President of Foodbrands Foodservice will remain in that role and also
report to Mr. Lee. Greg Huett, currently President of International for
Tyson, and Roel G. M. Andriessen, currently President of IBP
International, will both remain in their current roles and report to Mr.
Lee. Purchasing for the new company will be led by Kenneth L. Rose,
Executive Vice President of Operation Services for IBP, and will report
to Mr. Lee.
. The support services that will report directly to John Tyson include:
Human Resources, which will be led by Ken Kimbro, who is currently the
Senior Vice President of Human Resources for IBP. Mike Baker, currently
President of Production Services at Tyson, will head the Technical
Services area, which includes Quality Assurance and Food Safety,
Environmental Compliance, and The Center of Operational Excellence.
Additionally, Mr. Baker will continue his oversight of the Tyson
Cobb-Vantress Subsidiary. Also reporting to Mr. Tyson will be Bob
Corscadden, currently Tyson Senior Vice President of Corporate Marketing
who will head Marketing Services, Communications and Public Relations.
. Jim Cate, President of Tyson's Specialty Products Group will report to
Bill Lovette. The Pork Group, led by John Thomas, will become part of
the Fresh Meats Division.
. Steve Hankins will be the CFO and Les R. Baledge will be General Counsel
for the new company. Mr. Hankins will have the support services of
Accounting, Finance, Information Technology, and Risk Management
reporting to him. Carl Johnson, Tyson Executive Vice President of
Administrative Services will lead Risk Management and report to Mr.
Hankins. Mr. Baledge will head Legal Services.
21
THE SPECIAL MEETING
DATE, TIME AND PLACE
The special meeting will be held on September 28, 2001, at 9:00 a.m., local
time, at IBP World Headquarters, 800 Stevens Port Drive, Dakota Dunes, South
Dakota 57049.
PURPOSE
At the special meeting, you will be asked to vote on a proposal to approve
and adopt the merger agreement and the merger. A copy of the merger agreement
is attached as Appendix A to this proxy statement/prospectus. A copy of the
stipulation, which modified the merger agreement, is attached as Appendix B to
this proxy statement/prospectus.
RECORD DATE AND QUORUM REQUIREMENT
The close of business on August 27, 2001 has been fixed as the record date
for the determination of IBP stockholders entitled to notice of, and to vote
at, the special meeting. At the close of business on August 27, 2001, there
were 108,234,296 shares of IBP common stock issued and outstanding held by
approximately 3,850 holders of record.
Each holder of record of IBP common stock, par value $0.05 per share, at the
close of business on August 27, 2001 is entitled to one vote for each share
then held on each matter submitted to a vote of IBP stockholders.
The holders of a majority of the outstanding shares entitled to vote at the
special meeting (54,117,149 shares) must be present in person or represented by
proxy to constitute a quorum for the transaction of business. If you vote by
proxy card or in person at the special meeting, you will be considered part of
the quorum.
VOTING PROCEDURES
VOTING BY PROXY
Holders of record can ensure that their IBP shares are voted at the special
meeting by completing, signing, dating and delivering the enclosed proxy card
in the envelope provided. Submitting instructions by proxy will not affect the
right to attend the special meeting and vote.
If you return a signed proxy card but do not provide voting instructions,
the persons named as proxies on the proxy card will vote "FOR" the approval and
adoption of the merger agreement and the merger.
REVOKING YOUR PROXY
You may revoke your proxy at any time before it is voted by:
--giving notice, in person or in writing, to the Secretary of IBP at 800
Stevens Port Drive, Dakota Dunes, South Dakota 57049;
--delivering to the Secretary of IBP, at the address above, a revoking
instrument or a duly executed proxy indicating a contrary vote bearing a
later date; or
--attending the special meeting and voting in person.
22
ASSISTANCE
If you need help in changing or revoking a proxy, please contact IBP's
Investor Relations Department at (605) 235-2061.
VOTING AT THE SPECIAL MEETING
The method by which you vote now will not limit your right to vote at the
special meeting if you decide to attend in person. If your shares are held in
the name of a bank, broker or other nominee, you must obtain a proxy, executed
in your favor, from the holder of record to be able to vote at the special
meeting.
HOW IBP SHARES ARE VOTED
Subject to revocation, all IBP shares represented by each properly executed
proxy received by the Secretary of IBP will be voted in accordance with the
instructions indicated thereon. If no instructions are indicated, the IBP
shares will be voted to approve the merger proposal and in such manner as the
persons named on the proxy card in their discretion determine upon such other
business as may properly come before the special meeting.
VOTE REQUIRED
Under Delaware law, approval by IBP's stockholders of the merger proposal
will require the affirmative vote of a majority of the outstanding shares of
IBP common stock entitled to vote at the special meeting. Because Tyson and
Purchaser own approximately 50.1% of the outstanding shares of IBP common stock
and have agreed to vote for the merger proposal, IBP stockholder approval is
assured.
Abstentions and broker "non-votes" are counted as present and entitled to
vote for purposes of determining a quorum. However, such abstentions and broker
"non-votes" will have the same effect as a vote "against" the merger proposal
for purposes of determining whether the approval requirement under Delaware law
has been satisfied. A broker "non-vote" occurs when a bank, broker or other
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power for that
particular item and has not received instructions from the beneficial owner.
VOTING ON OTHER MATTERS
If any other matters are properly presented at the special meeting for
consideration, the persons named in the proxy will have the discretion to vote
on those matters for you. As of the date of this proxy statement, IBP does not
know of any other matter to be raised at the special meeting.
PROXY SOLICITATION
IBP will bear the cost of soliciting proxies. These costs include the
preparation, assembly and mailing of this proxy statement/prospectus, the
notice of special meeting of stockholders and the enclosed proxy card, as well
as the cost of forwarding such material to the beneficial owners of IBP common
stock. IBP directors, officers and regular employees may, without compensation
other than their regular compensation, solicit proxies by telephone, e-mail,
facsimile or personal conversation. IBP may also reimburse brokerage firms and
others for expenses in forwarding proxy material to the beneficial owners of
common stock.
PLEASE DO NOT SEND ANY CERTIFICATES REPRESENTING SHARES OF IBP COMMON STOCK
WITH YOUR PROXY CARD. IF THE MERGER IS COMPLETED, THE PROCEDURE FOR THE
EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF IBP COMMON STOCK WILL BE AS
DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS.
23
REQUIRED APPROVAL OF TYSON STOCKHOLDERS
Under Delaware law, Tyson stockholders need not approve the merger
agreement.
Under the rules of the NYSE, the issuance of Tyson common stock in the
merger requires stockholder approval prior to such issuance. Holders of Tyson
Class B shares 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 shares in the merger.
24
THE MERGER
GENERAL DESCRIPTION OF THE MERGER
The merger agreement provides that IBP will merge with and into Purchaser, a
wholly owned subsidiary of Tyson. Purchaser will be the surviving company and
will continue to conduct IBP's businesses under the name "IBP, inc." as a
direct, wholly-owned subsidiary of Tyson. In the merger, each outstanding IBP
share (other than those shares that are held by Tyson, Purchaser or by IBP as
treasury stock) will be converted into the right to receive Tyson Class A
shares.
In exchange for each share of IBP common stock, IBP stockholders will have
the right to receive a number of shares of Tyson Class A common stock having a
value of $30.00 if, during the consecutive 15-trading-day period ending on the
fifth trading day immediately preceding the effective time of the merger, the
average per share 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, then each IBP share outstanding immediately prior to the
effective time of the merger will be exchanged for 2.381 shares of Tyson Class
A common stock. If the average per share price of Tyson Class A common stock is
more than $15.40, then each IBP share outstanding immediately prior to the
effective time of the merger will be exchanged for 1.948 shares of Tyson Class
A common stock. The closing price of shares of Tyson Class A common stock was
$10.26 on August 27, 2001, the last full trading day before the date of this
proxy statement/prospectus. If that were the average per share price of Tyson
Class A common stock during the relevant consecutive 15-trading-day period, IBP
stockholders would receive 2.381 shares of Tyson Class A common stock with a
market value of $24.43 based on that average price in exchange for each share
of IBP common stock.
BACKGROUND
On October 2, 2000, IBP and Donaldson, Lufkin & Jenrette, Inc. (DLJ) jointly
announced that Rawhide Holdings Corporation (Rawhide), 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 and Rawhide Acquisition Corporation,
pursuant to which Rawhide would acquire all the outstanding shares of IBP
common stock in a transaction whereby each IBP share would be converted into
the right to receive $22.25 in cash.
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
Rawhide merger and to consider asserting their appraisal rights under Delaware
law.
On November 13, 2000, Smithfield Foods, Inc. announced in a public filing
with the SEC its offer to acquire all the outstanding shares of IBP common
stock for $25.00 a share payable in Smithfield common stock, subject to a
maximum exchange ratio of 0.878 and minimum exchange ratio of 0.719. Also, on
November 13, 2000, the Special Committee announced that it would begin
discussions with Smithfield. The Special Committee indicated in a letter to
Smithfield dated November 13, 2000, that it was particularly concerned with
potential regulatory issues as well as the "collar" on the exchange ratio in
Smithfield's offer. Thereafter, on November 16, 2000, IBP and Smithfield
announced that they had entered into a confidentiality agreement, pursuant to
which Smithfield 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 Smithfield beneficially owning more than 9.9% of the outstanding IBP
shares, except in each case under certain circumstances. On December 8, 2000,
Smithfield delivered a form of merger agreement to IBP.
On November 21, 2000 John Tyson, Chairman, President and Chief Executive
Officer of Tyson, contacted Richard Bond, President of IBP, and inquired as to
whether Robert Peterson, IBP's Chairman and Chief Executive Officer, might be
willing to meet with him as well as other senior Tyson executives. Mr. Bond and
25
Mr. Peterson agreed, and as a result, John Tyson and other senior Tyson
executives met with Mr. Peterson and Mr. Bond on November 24, 2000, during
which the Tyson representatives discussed generally Tyson's interest in a
possible business transaction with IBP. Mr. Bond and Mr. Peterson referred
them, during the discussions, to the Special Committee.
On December 4, 2000, Tyson sent a letter to the Special Committee in which
it proposed that Tyson acquire all the outstanding IBP common stock 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. To effect the transaction, Tyson would first commence a cash tender
offer for up to 50.1% of the outstanding IBP shares. After conclusion of the
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.
On December 4, 2000, the Special Committee sent Tyson a letter stating that
the Special Committee was prepared to enter into discussions with Tyson
regarding its proposal.
The Special Committee stated that a key point of concern with respect to the
Tyson proposal was the "collar" on the exchange ratio, noting that subsequent
to Tyson's announcement of its proposal, Tyson's stock traded below the lower
end of the proposed collar. The Special Committee also indicated that it was
interested in discussing the regulatory and political implication of Tyson's
proposal, and hearing Tyson's strategy for addressing any issues that might
arise in that regard.
On December 4, 2000, IBP and Tyson entered into a confidentiality agreement,
pursuant to which 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 11, 2000, Tyson announced its intention to commence a cash
tender offer to purchase up to the number of IBP shares that represent,
together with the IBP shares owned by Tyson, 50.1% of the outstanding IBP
shares. On December 12, 2000, Tyson filed a Schedule TO with the SEC with
respect to such offer and also delivered a form of merger agreement to IBP.
During the course of its discussions with representatives of the Special
Committee after Tyson had made its initial proposal to acquire IBP for $26.00
per IBP share, Smithfield stated that it would only submit a higher offer if
the Special Committee agreed to negotiate with Smithfield on an exclusive basis
or if there were a procedure in place which solicited best and final bids from
both Tyson and itself on a "blind" basis. The Special Committee determined that
it was not in the best interests of stockholders to negotiate with Smithfield
on an exclusive basis, but that it would facilitate the maximization of
stockholder value to receive a higher bid from Smithfield. For that reason, the
Special Committee decided that the best strategy for inducing a higher bid from
Smithfield was to solicit best and final bids from both Smithfield and Tyson.
On December 21, 2000, JPMorgan, the financial advisor to the Special Committee,
at the direction of the Special Committee, sent a letter to each of Smithfield
and Tyson requesting that they each submit their best and final bids, along
with proposed contracts, between 4:00 P.M. and 5:00 P.M. on December 29, 2000,
with such offers to remain open until 9:30 A.M. on January 2, 2001. The letter
stated that the Special Committee would not disclose the price proposed to be
paid by either bidder to the other bidder.
Prior to sending the request to Tyson and Smithfield, the Special
Committee's advisors contacted DLJ and asked whether Rawhide intended to submit
another offer, as permitted by the Rawhide merger agreement, if IBP gave notice
of its intention to terminate the Rawhide merger agreement for a superior
transaction. DLJ informed the Special Committee that it did not intend to
submit another offer and that it would waive the three business day period in
which it could do so, provided that it was paid the termination fee and
expenses provided for in the Rawhide merger agreement as soon as practicable
following termination.
26
Between December 21 and December 29, due diligence, negotiations and
discussions continued with each of Smithfield and Tyson regarding their
respective proposals and contracts. On December 27, 2000, members of management
of each of Smithfield and Tyson made presentations to the Special Committee by
separate conference calls, each describing its business and prospects and
making its case for the superiority of its offer.
On December 28, 2000, Tyson publicly announced that it was increasing its
proposal to $27.00 per IBP share but that it would not participate in a blind
bidding process and sent a letter to the Special Committee outlining the terms
of a revised proposal which included the following terms:
. in response to the Special Committee's request, Tyson increased the cash
tender 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;
. Tyson's bid would remain open until the close of business on Thursday,
January 4, 2001; and
. Tyson proposed to commence an exchange offer for all IBP shares not
purchased in the cash tender offer.
On December 29, 2000, Tyson filed amendments to its cash tender offer
documents with the SEC which summarized the terms of its revised offer and
included its proposed contract.
Following the close of trading on December 29, 2000, Smithfield submitted a
revised proposal to the Special Committee for a merger in which each IBP share
would be converted into $30.00 per IBP share in Smithfield stock, subject to a
maximum exchange ratio of 1.051 and a minimum exchange ratio of 0.905. In
conjunction with the letter outlining its revised proposal, Smithfield
delivered a draft merger agreement which provided for, among other things, a
termination fee of $50,000,000 plus expenses of up to $7,500,000 payable by
either party terminating the agreement for a superior offer, a $10,000,000 fee
payable to IBP if the agreement was terminated due to a failure to receive
either antitrust approval or Smithfield stockholder approval, and a commitment
by Smithfield to use "reasonable best efforts" to obtain necessary regulatory
approval. The Smithfield proposal also contemplated certain commitments with
respect to divestitures. Smithfield's draft agreement did not provide for the
advancement of the termination fee payable to Rawhide to terminate the Rawhide
merger agreement and conditioned Smithfield's obligation to consummate the
transaction on its receipt of an opinion from its independent public
accountants that the proposed merger qualified for pooling-of-interests
accounting treatment. The draft merger agreement also contemplated that IBP
would implement a rights plan in connection with the execution of the merger
agreement. Smithfield stated that its proposal was conditioned upon the Special
Committee and IBP not disclosing the details of the proposal to any third
party, including Tyson or Rawhide, or the media. Smithfield further stated that
its offer would expire at 6 p.m. on December 30, 2000.
On the morning of December 30, 2000, the Special Committee discussed with
its advisors the Tyson and the Smithfield proposals. JPMorgan provided the
Special Committee with its analysis of the relative values of the offers. The
Special Committee determined that it would ask each bidder to improve its
proposal. The Special Committee authorized Jo Ann Smith, chairperson of the
Special Committee, together with the Special Committee's advisors, to ask
Smithfield to increase the price proposed to be paid in its offer and to
provide a higher degree of certainty as to value by including a cash component,
broadening the collar, or providing contingent value rights. It was also
determined that Smithfield should be asked to improve the contractual terms of
its proposal to, among other things, provide greater certainty of consummation.
Ms. Smith and the Special Committee's advisors conveyed this message to
Smithfield and its advisors by telephone immediately following the Special
Committee meeting. The Special Committee also authorized Ms. Smith, together
with the Special Committee's advisors, to ask Tyson to improve the price it
proposed to pay and provide a higher degree of certainty as to value through a
broadening of the collar, and Ms. Smith and the Special Committee's advisors
conveyed the message to Tyson and its advisors by telephone early in the
afternoon of December 30th.
Smithfield and its advisors contacted Ms. Smith and the Special Committee's
advisors and stated that $30.00 per IBP share in the form presented previously
was its best and final offer. Smithfield stated that it was
27
willing to improve its offer by agreeing to accept some restrictions on the
conduct of its business that regulatory authorities might impose in connection
with the merger, to drop pooling accounting treatment as a condition to the
merger, and to increase the termination fee payable to IBP in the event the
agreement was terminated due to a failure to receive either antitrust approval
or Smithfield stockholder approval to $15,000,000.
Tyson responded that it would not submit another bid unless it was told the
details of Smithfield's bid or given some guidance as to a price the Special
Committee would find acceptable.
Following these conversations, the Special Committee reconvened, and Ms.
Smith and the Special Committee's advisors described for the Special Committee
the responses to the Special Committee's requests for improved bids. The
Special Committee determined that in order to solicit another offer from Tyson,
it would give Tyson a target price which the Special Committee would consider
superior to the Smithfield offer and indicate that it would be prepared to
proceed with Tyson to negotiate a definitive contract.
Based on, among other things, JPMorgan's analysis of market sensitivity and
volatility and time value differences, the Special Committee concluded that if
Tyson increased its bid to $28.50 per IBP share, 50% of which would be paid in
a cash tender offer and 50% of which would be paid in Tyson stock in an
exchange offer, subject to a collar, such a transaction would have greater
current value and greater certainty than the Smithfield $30.00 per IBP share
all stock proposal.
Ms. Smith and the Special Committee's advisors conveyed the target price of
$28.50 per IBP share to Tyson following the meeting. Shortly thereafter, Tyson
said that it would raise its bid to the target price proposed by the Special
Committee, and the parties agreed to work that evening and the next morning to
resolve the remaining contractual issues and to finalize the documentation,
with the Special Committee and the full IBP Board meeting thereafter to
consider the transaction.
In the early evening of December 30, 2000, representatives of the Special
Committee contacted Smithfield and its advisors and informed them that the
Special Committee had determined to go "in a different direction."
On the morning of December 31, 2000, Smithfield delivered a letter to the
Special Committee in which it increased its offer to $32.00 per IBP share
payable in Smithfield stock. Smithfield stated that the revised offer was
conditioned on the Special Committee not divulging the details of its revised
offer and stated that the offer would expire at noon on January 1, 2001.
Smithfield orally advised the Special Committee that the bottom end of its
collar would be lowered to $28.12 per Smithfield share.
Early in the afternoon of December 31, 2000, the Special Committee met to
consider the new Smithfield proposal. The Special Committee determined that it
would advise Tyson that Smithfield had submitted a revised proposal on an
unsolicited basis which increased its prior offer by $2.00 per IBP share in
stock, and Ms. Smith and the Special Committee's advisors relayed this message
to Tyson.
In the afternoon of December 31, 2000, Tyson informed the Special Committee
that it would submit a proposal in response to the new Smithfield proposal at 9
a.m. on January 1, 2001, but only if the Special Committee committed to
definitively accept or reject the proposal by 11 a.m. on January 1, 2001 and
agreed to have no communication with Smithfield until such time. The Special
Committee met early in the evening of December 31st and agreed to receive
Tyson's proposal on January 1st on Tyson's timetable and subject to its
restriction on communicating with Smithfield. The Special Committee concluded
that its failure to do so or to agree to Tyson's other terms for submission of
its new proposal ran the unacceptable risk that Tyson would not submit its
proposal, thereby possibly depriving IBP's stockholders of what could be a
Tyson bid providing greater value than the latest Smithfield offer. The Special
Committee noted that if Tyson did not make an acceptable improvement in its
proposal, it would still have the option of accepting Smithfield's latest
offer. In addition, the terms of Tyson's proposals to that point had not
contained any provisions which would be impediments to further bids by
Smithfield.
28
At 9 a.m. on January 1, 2001, Tyson submitted a bid of $30.00 per IBP share
on the same terms as had been previously proposed, except for the addition of a
$15,000,000 termination fee. Immediately thereafter the Special Committee met,
along with its advisors, to consider the revised Tyson proposal. At this
meeting the Special Committee, together with its advisors, reviewed the updated
Smithfield and Tyson proposals. JPMorgan and Peter J. Solomon Limited, or PJSC,
a financial advisor to the Special Committee, gave presentations on the
financial aspects of the proposals, and each of JPMorgan and PJSC orally
delivered its opinion to the Special Committee that, as of such date, and based
upon and subject to certain matters and assumptions, the consideration to be
received by IBP stockholders pursuant to the Tyson $30.00 per IBP share offer
was fair from a financial point of view to such holders. Representatives of
JPMorgan also stated that in the scenarios they saw as most likely, Tyson's
proposal would have more current value than the Smithfield proposal. Following
the presentations and the receipt of the opinions, the Special Committee
unanimously determined to recommend the Tyson offer to the full IBP Board.
Following the Special Committee meeting, the full IBP Board met, along with
the Special Committee's advisors. The Special Committee's legal and financial
advisors reviewed the Smithfield and Tyson proposals for the full IBP Board.
The Special Committee's financial advisors reiterated their opinions as to the
fairness of the consideration to be received by IBP stockholders pursuant to
the Tyson offer from a financial point of view to such holders. JPMorgan's
representatives repeated their advice that in the scenarios they saw as most
likely, the Tyson proposal would have more current value than the Smithfield
proposal. Following such presentations, the full IBP Board unanimously approved
the merger agreement with Tyson and Purchaser and the transactions contemplated
thereby, including the cash tender offer, the exchange offer and the merger,
and resolved to recommend that the stockholders of IBP accept the cash tender
offer and the exchange offer and tender their shares to Purchaser.
Following the IBP Board meeting, IBP advised Tyson of the actions taken by
the Special Committee and the IBP Board and notified Rawhide that it was
terminating the Rawhide merger agreement. The definitive merger agreement was
executed at 11 a.m. on January 1, 2001. Press releases announcing the
transaction were issued in the afternoon of January 1, 2001.
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 shares of IBP common
stock on January 2 and 3, thus reducing the number of shares of IBP common
stock that were beneficially owned to 4,409,341, representing approximately
4.2% of the outstanding shares of IBP common stock.
On January 5, 2001, Tyson filed its amended cash tender offer documents 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 IBP
stockholders on or about January 5, 2001.
On January 10, 2001, IBP advised Tyson that on December 29, 2000, the
advisors 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 merger 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. It 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.
On January 17, 2001, Tyson filed amended cash tender offer documents with
the SEC to extend its cash tender offer until January 24, 2001.
On January 25, 2001, Tyson filed amended cash tender offer documents with
the SEC to extend its cash tender offer until February 7, 2001. Tyson announced
that it was delaying the commencement of the exchange
29
offer and the closing of the cash tender offer pending the satisfaction of the
SEC with the resolution of various accounting issues 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 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, or 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 its cash tender offer until February 20, 2001.
On February 21, 2001, Tyson filed amended cash tender offer documents with
the SEC to extend its cash tender 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 agreed to make in response to a SEC review of various filings
made by IBP in 2000. The amendments would also include revisions based upon the
results of IBP's investigation of financial results at its DFG Foods
subsidiary.
On February 26, 2001, the IBP Board convened a meeting. Noting that the
merger agreement provided for the cash tender offer to be terminated if not
consummated by February 28, 2001 and that Tyson had announced it would not
proceed with the cash tender offer until IBP's accounting issues were resolved,
the IBP Board directed its representatives to contact Tyson's representatives
and propose that Tyson extend the cash tender 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 cash tender offer to expire and to proceed with
the cash election merger provided for under the merger agreement.
On February 28, 2001, Tyson announced that, since the conditions to the cash
tender offer were not satisfied, it was going to terminate its cash tender
offer and begin to work on a cash election merger with IBP, in accordance with
the merger agreement.
On March 13, 2001, IBP filed with the SEC the following amended and restated
reports:
. its Annual Report on Form 10-K for the fiscal year ended December 25,
1999;
. 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
. 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
30
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:
. 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.
. 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 requires the
application of 'variable plan' accounting principles, which mandates 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 has been as
high as $9.4 million. The impact on net earnings in the fourth quarter
of 2000 is an additional $9.5 million; however, the total impact for
2000 is approximately $9.8 million. All of these compensation charges
were non-cash charges.
. 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.
. 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:
NET EARNINGS PER SHARE
AS PREVIOUSLY
PERIOD 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.
31
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, 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.
On April 19, 2001, the Delaware Court of Chancery issued a temporary
restraining order prohibiting Tyson from pursuing its litigation in Arkansas
and on May 10, the Delaware Court of Chancery issued a preliminary injunction
to the same effect. On April 23, Tyson filed an answer to IBP's cross-claims in
the Delaware action and asserted counterclaims against IBP, seeking, among
other things, to rescind or terminate the merger agreement. On May 14, 15, 16,
17, 18, 21, 22, 24 and 25, IBP's cross-claim for specific performance and
Tyson's claim for rescission and to terminate the merger agreement were tried
before the Delaware Court of Chancery. On June 15, 2001, the Delaware Court of
Chancery issued its Memorandum Opinion directing specific performance by Tyson
of the merger agreement and dismissing Tyson's counterclaims. Since then, the
parties negotiated the terms of the order required by the Delaware Court of
Chancery, resulting in the stipulation and Tyson's commencement of the tender
offer on July 3, 2001. Please see "Legal Matters--Tyson/IBP Litigation" in this
proxy statement/prospectus for a more complete description of the Delaware
litigation.
Pursuant to the stipulation, Tyson agreed to take such steps as were
necessary to consummate the transactions contemplated by the merger agreement,
as modified by the stipulation. The stipulation provided for Purchaser to make
a tender offer for $30.00 per IBP share. The stipulation deleted the provision
for an exchange offer. The termination fee to be paid to Tyson under certain
circumstances was increased from $15,000,000 to $59,000,000. The stipulation
also changed the date after which IBP could terminate the merger agreement if
the tender offer had not been consummated to August 15, 2001, and deleted the
provisions which would allow either party to terminate the merger agreement
based on the failure of the merger to occur by a specified date or based on the
existence of a law or regulation or other legal restraint on the ability of the
parties to consummate the transactions contemplated by the merger agreement. In
addition, Tyson's ability to terminate the merger agreement based on a breach
by IBP of a representation, warranty or covenant has been eliminated. Pursuant
to the stipulation, Purchaser was not obligated to purchase IBP shares prior to
August 15, 2001 unless, prior to that date, an order was entered approving the
settlement of IBP stockholder litigation, captioned IN RE IBP, INC.
SHAREHOLDERS LITIGATION, C.A. No. 18373. Please see "Legal Matters--IBP
Stockholder Litigation" in this proxy statement/prospectus for a description of
the IBP stockholder litigation. The entry of the settlement order was a
condition only to Purchaser's obligation to purchase IBP shares pursuant to the
tender offer prior to August 15, 2001 and was not a condition to Purchaser's
obligation to purchase IBP shares pursuant to the tender offer on and after
August 15, 2001. In addition, Purchaser was not obligated to purchase IBP
shares prior to September 1, 2001 unless, prior to that date, Tyson obtained
financing to pay for the tendered IBP shares. The obtaining of such financing
was a condition only to Purchaser's obligation to purchase IBP shares pursuant
to the tender offer prior to September 1, 2001 and was not a condition to
Purchaser's obligation to purchase IBP shares pursuant to the tender offer on
and after September 1, 2001.
32
Under the terms of the stipulation, if the tender offer was not consummated
by August 15, 2001 (or by September 1, 2001, if the time for consummation had
been extended to such date pursuant to the terms of the stipulation) or if the
merger is not consummated by November 15, 2001, either IBP or Tyson would be
entitled to move the Delaware Chancery Court for an appropriate remedy
including, but not limited to, specific performance of such transactions, or
specific performance of the cash election merger contemplated by the original
merger agreement, and/or damages and either IBP or Tyson will be entitled to
oppose any such motion on any appropriate grounds. The Delaware Chancery Court
retains exclusive jurisdiction over the matter and Tyson has agreed not to
initiate any action against IBP arising out of or relating to the stipulation
in any forum other than the Delaware Chancery Court unless and until the
Delaware Chancery Court determined that Tyson was not required to consummate
the tender 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. Tyson and IBP agreed that neither of them would move for the entry of
a final judgment with respect to the post-trial order issued in the case unless
and until the Delaware Chancery Court determined that Tyson was not required to
consummate the tender offer or IBP moved for an adjustment to the financial
terms of the consideration, an award of interest and/or damages, which
agreement had the effect of precluding the parties from appealing the Delaware
Chancery Court's decision until such time.
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, agreed to become members of the board of directors of
Tyson upon closing of the merger.
On July 3, 2001, Tyson commenced a tender offer for up to 50.1% of the
outstanding IBP shares, pursuant to the stipulation. IBP filed a Schedule 14D-9
in response to Tyson's tender offer, in which it recommended that IBP
stockholders tender their shares in the tender offer. Tyson's tender offer
documents and IBP's Schedule 14D-9 were mailed to IBP's stockholders on or
about July 6, 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 tender 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 tender offer expired. On August 4, 2001, Tyson issued
a press release announcing the successful completion of the tender 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.
On August 10, 2001, Tyson issued a press release announcing the final
results of the tender offer. 105,341,969 shares of IBP common stock,
representing approximately 97.4% of the total outstanding IBP shares, had been
tendered and not withdrawn prior to the expiration of the tender offer. Tyson
announced that it would be purchasing 53,612,799 of the tendered IBP shares,
after which it and Purchaser would own approximately 50.1% of the outstanding
IBP shares.
IBP REASONS FOR THE MERGER; RECOMMENDATION OF THE IBP BOARD OF DIRECTORS
In reaching their recommendations with regard to the transaction with Tyson,
the Special Committee and the IBP Board considered a number of factors,
including the following:
JANUARY 1 RECOMMENDATION.
JPMORGAN ANALYSIS. In comparing the Tyson $30.00 per IBP share proposal and
the Smithfield $32.00 per IBP share proposal, the Special Committee and the IBP
Board considered the presentation by JPMorgan with respect to the relative
value of the two proposals. This presentation included an analysis of the time
value of money using the face value of the two proposals. The time value
analysis considered different scenarios in respect of each proposal
hypothesizing a range of time frames for the receipt of the consideration by
IBP's stockholders. These scenarios were arrived at based in part upon
discussions with representatives of and advisors to each of Tyson and
Smithfield regarding their regulatory issues.
33
In addition, the Special Committee and the IBP Board considered a
sensitivity analysis performed by JPMorgan which analyzed the relative value of
the two proposals, using the mid-point deal-timing scenarios of the time value
analysis, assuming different levels of decline in the share prices of Tyson and
Smithfield and taking into account the fact that half of the consideration to
be paid under the Tyson proposal would be cash. JPMorgan focused its analysis
on a range of potential declines for each of Tyson stock and Smithfield stock,
which range of potential declines was greater in the case of Smithfield than in
the case of Tyson. In making this judgment, JPMorgan took into account a number
of factors which it reviewed with the Special Committee and the IBP Board,
including the relative historical performance of Tyson stock and Smithfield
stock, including historical stock price volatility, the reaction of the market
to the initial Smithfield proposal for IBP and the reaction of the market to
each of the publicly announced Tyson proposals for IBP, the pro forma
dilutive/accretive impact of the offers on each of Tyson and Smithfield both
with and without anticipated synergies, the comparative effect on the float and
volume of the securities of Tyson and Smithfield, the pro forma effect of a
transaction with IBP on each of Tyson's and Smithfield's trading multiples,
analyst ratings, outlook and comments regarding a combination with IBP,
forecasts of financial performance provided by the management teams of Tyson
and Smithfield compared to analyst consensus for Tyson and Smithfield and the
fact that it was anticipated that the Smithfield transaction would take a
longer time to consummate. In light of these factors, the Special Committee and
the IBP Board did not believe it would be prudent in assessing the relative
values of the two proposals to assume near term price increases for either
Tyson or Smithfield above the high end of their respective collars ($15.40 per
share in the case of Tyson, and $33.15 per share in the case of Smithfield).
Based upon these analyses, JPMorgan advised the Special Committee and the IBP
Board that in the scenarios it saw as most likely, the Tyson proposal would
have more current value than the Smithfield proposal, and the Special Committee
and the IBP Board considered these analyses in assessing the proposals.
TIMING AND PROBABILITY OF COMPLETION. The Special Committee and the IBP
Board considered the anticipated timing of consummation of the transactions
contemplated by the merger agreement, including the structure of the
transactions as a tender offer for 50.1% of IBP shares and an exchange offer
for the remainder of IBP shares, which should allow stockholders to receive the
cash and stock consideration earlier than the stock merger proposed by
Smithfield. The Special Committee and the IBP Board considered that the
estimated time frame for completing the Tyson transaction was much shorter than
the estimated time frame for the Smithfield transaction, thus subjecting the
transaction to a lesser degree of risk for elements such as material adverse
changes. The Special Committee and the IBP Board considered the anticipated
regulatory delays, including the fact that a transaction with Smithfield would
likely be subject to greater regulatory scrutiny and delay than a transaction
with Tyson. The Special Committee concluded that there were no significant
regulatory issues presented by the Tyson proposal and noted that Tyson had
agreed to take all actions necessary to gain regulatory approval and was
willing to pay to IBP a $70,000,000 "reverse termination fee" if the
transaction could not be completed because antitrust approval could not be
obtained. The Special Committee concluded that there were substantive antitrust
issues presented by a combination with Smithfield, and that while Smithfield
had indicated a willingness to undertake certain divestitures and agree to some
restrictions on the conduct of its business to address those issues, and the
Special Committee believed that such divestitures and agreements should result
in a successful resolution of those issues, the Special Committee nevertheless
concluded that there would likely be significant political opposition to a
transaction with Smithfield, introducing a further element of uncertainty as to
ultimate consummation and timing. In addition, Smithfield was only willing to
commit to a $15 million termination fee if its transaction could not be
completed because antitrust approval could not be obtained.
OTHER CONSUMMATION RISK. The Special Committee and the IBP Board considered
the relative consummation risk inherent in the Tyson and Smithfield proposals
separate and apart from the political and regulatory risk of non-consummation
described above. Tyson's obligation to consummate the merger was subject to a
limited number of conditions, with no financing condition and the Tyson
stockholder approval was assured as a result of a voting agreement with its
principal stockholder. By contrast, the Smithfield proposal was conditioned
upon Smithfield stockholder approval, although Smithfield was willing to pay
IBP $15,000,000 if Smithfield stockholder approval was not obtained and
$50,000,000, plus up to $7,500,000 million in expenses, if such approval was
not obtained as a result of a superior proposal to acquire Smithfield.
34
SUBSEQUENT PROPOSALS. The Special Committee and the IBP Board considered
that under the terms of the merger agreement, although IBP was prohibited from
soliciting acquisition proposals from third parties, IBP could have engaged in
discussions or negotiations with, and could have furnished non-public
information to, a third party who made a bona fide acquisition proposal that
the Special Committee determined in good faith (after consultation with a
financial advisor of national reputation and taking into account all the terms
and conditions) was likely to result in a proposal which was more favorable
from a financial point of view than the transactions contemplated by the merger
agreement and was reasonably capable of being completed. The Special Committee
and the IBP Board considered that the terms of the merger agreement permitted
IBP to terminate the merger agreement to enter into such a superior transaction
involving IBP if, among other things, (i) IBP gave Tyson at least three
business days' notice in writing that it intended to enter into an agreement
for such superior transaction, (ii) Tyson was permitted to make a new offer,
which would be considered by the Special Committee in good faith and (iii) IBP
paid Tyson a $15,000,000 termination fee as well as reimbursed the amounts
advanced to IBP by Tyson to pay the Rawhide termination fee and paying Tyson
$7,500,000 as reimbursement for its expenses. The Special Committee and the IBP
Board considered that these provisions of the merger agreement were unlikely to
deter third parties who might be interested in exploring an acquisition of IBP.
The Special Committee and the IBP Board considered that, by contrast,
Smithfield requested a $50,000,000 termination fee plus up to $7,500,000 in
expenses and was unwilling to advance IBP the funds necessary to pay the
termination fee and reimburse expenses under the Rawhide merger agreement.
FAIRNESS OPINIONS. The Special Committee and the IBP Board considered
presentations from JPMorgan and PJSC and the opinions of JPMorgan and PJSC,
dated January 1, 2001, that, based upon and subject to certain considerations
and assumptions, the purchase price and exchange ratio to be received by
holders of IBP shares pursuant to the merger agreement was fair from a
financial point of view to such holders. Copies of each of the opinions
rendered by JPMorgan and PJSC to the Special Committee on January 1, 2001,
setting forth the procedures followed, the matters considered and the
assumptions made by each of JPMorgan and PJSC in arriving at its opinion, are
attached as Appendices D and E hereto, respectively, and are incorporated
herein by reference. The Special Committee and the IBP Board were aware that
JPMorgan becomes entitled to certain fees upon the consummation of the merger.
TRANSACTION FINANCIAL TERMS/PREMIUM. The Special Committee and the IBP Board
considered the relationship of the merger consideration to the historical
market prices of IBP shares and to the price in the Rawhide merger agreement.
The cash consideration to be paid in the merger represents a 34.8% premium over
the $22.25 per IBP share price in the Rawhide merger agreement. The Special
Committee and the IBP Board also considered the form of consideration to be
paid to holders of IBP shares in the merger, and the certainty of value of the
cash consideration compared to stock consideration. The Special Committee and
the IBP Board were aware that the IBP Board's fiduciary duty to IBP
stockholders had changed as a result of the decision to enter into the Rawhide
merger agreement from the preservation of IBP as a corporate entity to the
maximization of IBP's current value at a sale for the stockholders' benefit.
The Special Committee and the IBP Board determined that both the Tyson proposal
and the Smithfield proposal provided substantially greater value than the
Rawhide merger agreement. The Special Committee and the IBP Board were aware
that the cash consideration received by the holders of IBP shares in the Tyson
merger would be taxable to such holders for federal income tax purposes.
POTENTIAL CONFLICTS OF INTEREST. The Special Committee and the IBP Board
were aware of the potential conflicts of interest between IBP, on the one hand,
and certain of IBP's officers, director or affiliates, on the other hand, in
the merger.
The foregoing includes the material factors considered by the Special
Committee and the IBP Board in approving the transaction with Tyson on January
1, 2001. In view of its many considerations, the Special Committee and the IBP
Board did not find it practical to, and did not, quantify or otherwise assign
relative weights to the various individual factors considered. In addition,
individual members of the Special Committee and the IBP Board may have given
different weights to the various factors considered. After weighing all of
these considerations, the Special Committee unanimously determined to recommend
the merger agreement to the IBP
35
Board and the IBP Board unanimously determined to approve the merger agreement
and the transactions contemplated thereby.
JUNE 26 RECOMMENDATION.
In determining that the terms of the stipulation are in the best interests
of IBP and its stockholders, the IBP Board considered the fact that pursuant
thereto Tyson agreed to complete the transaction on the same financial terms as
those provided for in the original merger agreement and effectively agreed not
to appeal the Delaware Chancery Court's June 15 decision unless and until the
Delaware Chancery Court determined that Tyson does not have to proceed with the
tender offer contemplated by the stipulation. The IBP Board also considered the
fact that the stipulation reduces the number of covenants and representations
to which Tyson's obligation to close the tender offer and merger is subject,
thereby greatly enhancing the likelihood of consummation. In particular, the
IBP Board considered that the absence of a material adverse effect with respect
to IBP is no longer a condition to Tyson's obligation to perform. The IBP Board
also took into account an opinion by JPMorgan dated June 26, 2001 to the effect
that the purchase price to be paid to IBP's stockholders in the tender offer
and the exchange ratio applicable to the merger are fair from a financial point
of view to IBP's stockholders. A copy of the June 26 written opinion rendered
by JPMorgan, setting forth the procedures followed, the matters considered and
the assumptions made by JPMorgan in arriving at its opinion, is attached as
Appendix C to this proxy statement/prospectus, and is incorporated herein by
reference.
The foregoing includes the material factors considered by the IBP Board on
June 26, 2001. In view of its many considerations, the IBP Board did not find
it practical to, and did not, quantify or otherwise assign relative weights to
the various individual factors considered. In addition, individual members of
the IBP Board may have given different weights to the various factors
considered.
FOR THE REASONS DISCUSSED ABOVE, THE IBP BOARD HAS DETERMINED THAT THE
STIPULATION AND THE TERMS OF THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS
OF THE IBP STOCKHOLDERS. ACCORDINGLY, THE IBP BOARD UNANIMOUSLY RECOMMENDS THAT
IBP STOCKHOLDERS VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT.
OPINION OF THE FINANCIAL ADVISOR TO THE IBP BOARD
At the IBP Board meeting on June 26, 2001, JPMorgan gave its oral opinion,
confirmed in writing, to the IBP Board that, as of that date and on the basis
of and subject to the matters described in the opinion, each of the offer price
to be paid in the tender offer and the exchange ratio proposed in the merger is
fair, from a financial point of view, to the IBP stockholders. We have attached
as Appendix C to this proxy statement/prospectus and have incorporated by
reference the full text of the written opinion of JPMorgan dated June 26, 2001,
which sets forth the assumptions made, matters considered and limits on the
review undertaken. We urge you to read the opinion in its entirety. The summary
of the opinion of JPMorgan set forth in this document is qualified in its
entirety by reference to the full text of such opinion. In view of the
potential for additional expense, and in view of the IBP Board's confidence in
JPMorgan acting alone, PJSC was not asked to update its opinion.
JPMorgan's opinion is addressed to the IBP Board, is directed only to the
consideration to be received by the stockholders in the tender offer and the
merger, referred to in this section of the proxy statement/prospectus as the
"Transaction", and does not constitute a recommendation to any stockholder as
to how to vote with respect to the Transaction.
In arriving at its opinion, JPMorgan reviewed, among other things:
. Tyson's Offer to Purchase, dated December 12, 2000;
. the merger agreement;
36
. the court opinion of the Delaware Chancery Court relating to certain
litigation between IBP and Tyson and certain other information regarding
such litigation as JPMorgan deemed relevant;
. the draft dated June 26, 2001 of the stipulation;
. the Amendment No. 2 to Schedule 14D-9 filed by IBP on January 5, 2001,
as amended;
. certain publicly available information concerning the business of IBP,
Tyson and of certain other companies in the meat processing and branded
foods sector and the reported market prices for such other companies'
securities;
. publicly available terms of certain transactions involving companies in
the meat processing and branded foods sector and the consideration
received for such companies;
. current and historical market prices of IBP common stock and Tyson Class
A common stock;
. publicly available information regarding IBP and Tyson;
. certain internal financial analyses and forecasts prepared by IBP's
management and Tyson's management (JPMorgan having noted that such
analyses and forecasts were provided to it in December 2000 and were not
updated by IBP or Tyson prior to JPMorgan's June 26, 2001 opinion); and
. the terms of other business combinations JPMorgan deemed relevant.
In addition, JPMorgan held discussions with certain members of the
management of IBP and Tyson with respect to certain aspects of the Transaction,
and IBP's and Tyson's past and current business operations, IBP's and Tyson's
financial condition and future prospects and operations, the effects of the
Transaction on IBP's and Tyson's financial condition and future prospects, and
certain other matters JPMorgan believed necessary or appropriate to its
inquiry. JPMorgan also reviewed other financial studies and analyses and
considered such other information as it deemed appropriate for the purposes of
its opinion.
In giving its opinion, JPMorgan relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was
publicly available or was furnished to it by IBP or Tyson or otherwise reviewed
by JPMorgan, and has not assumed any responsibility or liability for such
information. JPMorgan did not conduct any valuation or appraisal of any assets
or liabilities, and no such valuations or appraisals were provided to JPMorgan.
In relying on financial analyses and forecasts provided to it, JPMorgan assumed
that they were reasonably prepared based on assumptions reflecting the best
currently available estimates and judgments by IBP's and Tyson's management as
to the expected future results of IBP's and Tyson's operations and IBP's and
Tyson's financial condition to which such analyses or forecasts relate. In such
connection, JPMorgan assumed that if updated analyses and forecasts had been
provided to JPMorgan subsequent to December 2000, such analyses and forecasts
would not differ in any material respects from those that were actually made
available to JPMorgan by managements of IBP and Tyson. JPMorgan also assumed
that the Transaction will have the tax consequences described in discussions
with, and materials furnished to JPMorgan by, IBP's representatives, and that
the other transactions contemplated by the stipulation will be consummated as
described in such agreement. JPMorgan further assumed that the definitive
stipulation would not differ in any material respects from the draft thereof
furnished to JPMorgan. JPMorgan relied as to all legal matters relevant to
rendering its opinion upon the advice of counsel.
In its opinion, JPMorgan noted that it was familiar with the terms of an
alternative merger transaction with IBP proposed by Smithfield concurrently
with the negotiation of the Tyson transaction in December 2000 and January 2001
and that it participated in negotiations with respect to such alternative
transaction. JPMorgan noted that it took such facts into account in rendering
its opinion.
Additionally, JPMorgan was aware and considered the litigation between Tyson
and IBP in its opinion. In an opinion dated June 18, 2001, the Delaware
Chancery Court ruled, among other things, that the original merger
37
agreement between IBP and Tyson was a valid and enforceable contract that Tyson
had no right to terminate and ruled that an award of specific performance was
appropriate. JPMorgan was also aware that Tyson and IBP proposed to enter into
the above-referenced stipulation, subject to approval of the Delaware Chancery
Court, pursuant to which, among other things, Tyson will take such steps as are
necessary to consummate the transactions contemplated by the original merger
agreement as modified by the stipulation, including the commencement of a cash
tender offer on the terms and conditions of the original amended cash offer and
a merger on the terms and conditions of the originally proposed merger, in each
case as modified by the stipulation.
As is customary in the rendering of fairness opinions, JPMorgan based its
opinion on economic, market and other conditions as in effect on, and the
information made available to JPMorgan, as of June 26, 2001. Subsequent
developments may affect JPMorgan's opinion and JPMorgan does not have any
obligation to update, revise or reaffirm its opinion. JPMorgan's opinion
expressed no opinion as to the price at which the Tyson Class A common stock
will trade at any time.
In accordance with customary investment banking practice, JPMorgan employed
generally accepted valuation methods in reaching its opinion. The following is
a summary of the material financial analyses performed by JPMorgan in
connection with its opinion. IBP has presented some of the summaries of the
financial analyses in tabular format. In order to understand the financial
analyses used by JPMorgan more fully, you should read the tables together with
the text of each summary. The tables alone do not constitute a complete
description of JPMorgan's financial analyses.
HISTORICAL COMMON STOCK PERFORMANCE. JPMorgan conducted a historical
analysis of the closing price of IBP's common stock based on closing prices on
the NYSE and also examined prices of other companies in the meat processing and
branded foods sector.
. JPMorgan noted that in the three-month period prior to October 1, 2000
(the date of announcement of the Rawhide merger agreement), IBP's stock
price ranged between $14.125 and $18.313 per IBP share.
. JPMorgan also pointed out that IBP's stock in the period from August 9,
2000 (the date of DLJ's first indicative offer to purchase IBP) until
September 29, 2000, outperformed the stocks of Smithfield, Hormel Foods
Corporation, ConAgra Foods, Inc., Tyson, Pilgrim's Pride Corporation and
Sanderson Farms, as well as the S&P 500 index. Specifically, IBP's
common stock appreciated 20.6% over this period while the S&P 500 was
down 1.6%. The stock prices of Smithfield, Hormel Foods Corporation,
ConAgra Foods, Inc. and Tyson appreciated between 0.2% and 4.6% over
this period.
. JPMorgan also found that in the one-year period prior to October 1,
2000, IBP's stock price ranged between $11.188 and $25.00 per IBP share.
In addition, IBP's common stock generally followed the trend of an index
comprised of the equally weighted stock prices of Pilgrim's Pride
Corporation, Sanderson Farms, WLR Foods Inc., Cagle's, Smithfield,
Hormel Foods Corporation, ConAgra Foods, Inc. and Tyson.
. JPMorgan also noted that in the three-year period prior to October 1,
2000, IBP's stock price ranged between $11.188 and $29.250 per IBP
share. In addition, IBP's common stock performed in line with an index
comprised of the equally weighted stock prices of Pilgrim's Pride
Corporation, Sanderson Farms, WLR Foods Inc., Cagle's, Smithfield,
Hormel Foods Corporation, ConAgra Foods, Inc. and Tyson.
. JPMorgan also found that in the period from October 1, 2000 until
December 29, 2000 (the last trading date prior to the announcement of
the Transaction), IBP's stock price ranged between $20.1875 and $26.75
per IBP share.
. JPMorgan also pointed out that in the period from October 1, 2000 until
December 29, 2000, the common stocks of Smithfield, Hormel Foods
Corporation, ConAgra Foods, Inc., Tyson, Pilgrim's
38
Pride Corporation, Sanderson Farms, WLR Foods Inc. and Cagle's
appreciated between 3.2% and 29.6% while the S&P 500 index declined
8.1%.
. JPMorgan also noted that in the period from December 4, 2000 (the first
trading date after Tyson publicly announced its proposal to acquire IBP
for $26 per IBP share) until December 29, 2000 (the last trading date
prior to the announcement of the Tyson transaction and the trading day
following Tyson's public announcement of its intention to acquire IBP
for $27 per IBP share) Tyson's closing stock price ranged between $11.75
and $12.75 per share. JPMorgan also noted that the intraday low reached
by Tyson's Class A common stock over such period was $10.8125. JPMorgan
also highlighted that Tyson Class A common stock closed at $12.75 on
December 28, 2000 and December 29, 2000 and that Tyson made a public
announcement regarding its intention to acquire IBP for $27 per IBP
share after the market close on December 28, 2000.
. JPMorgan also noted the reaction in Tyson's share price with respect to
four major developments: (1) the receipt of Tyson's initial proposal to
IBP on the morning of December 4, 2000; (2) the announcement of the
definitive proposal signed on January 1, 2001; (3) Tyson's announcement
of its intention to terminate the merger agreement after market close on
March 29, 2001; (4) and the announcement of the Delaware Chancery Court
opinion on June 15, 2001, after the market close. JPMorgan noted that
Tyson's stock price was below its closing stock price on December 1,
2000 (three days prior to the receipt of the initial proposal) after the
announcement of each of the four major developments. Tyson's stock
closed 10.8%, 15.6%, 17.9% and 33.1%, respectively, below Tyson's
closing price on December 1, 2000 (three days prior to the first major
development) after the announcement of each of the four major
developments mentioned above.
39
ANALYSIS OF PREMIUM. JPMorgan calculated the premium implied by $26 and $30
per IBP share relative to certain base prices.
The table below sets forth JPMorgan's premium analysis:
BASE PREMIUM PREMIUM
DESCRIPTION OF BASE PRICE IMPLIED BY $26 IMPLIED BY $30
------------------- ------ -------------- --------------
Latest close (06/22/01)........ $23.56 10.4% 27.3%
First DLJ offer (08/09/00) (1). 15.19 71.2% 97.5%
September 29, 2000 (2)......... 18.31 42.0% 63.8%
LTM average prior to LBO (3)... 17.12 51.9% 75.2%
March 30, 2001 (4)............. 16.40 58.5% 82.9%
5 day average since termination 15.67 65.9% 91.4%
Low since termination (5)...... 14.66 77.4% 104.6%
LTM high close................. 28.81 (9.8%) 4.1%
3-year high close.............. 29.25 (11.1%) 2.6%
LTM low close.................. 14.13 84.1% 112.3%
3-year low close............... 11.19 132.4% 168.1%
--------
(1)Non-public offer
(2)Day prior to public announcement regarding DLJ transaction
(3)12 months prior to September 29, 2000
(4)Price following Tyson merger termination announcement
(5)Excluding trading following most recent court opinion announcement
JPMorgan noted that the premium analysis does not constitute a valuation
technique as such, but serves as a comparison of the proposed transaction price
to various base prices.
DISCOUNTED CASH FLOW ANALYSIS. JPMorgan conducted a discounted cash flow
analysis for the purpose of determining the fully diluted equity value per IBP
share. JPMorgan utilized forecasts provided by IBP's management team. These
forecasts were prepared prior to IBP and Tyson entering into the original
agreement and were provided to both Tyson and Smithfield. IBP does not as a
matter of course make public forecasts as to future revenues, earnings or other
financial information, and the forecasts were not prepared with a view to
public disclosure.
40
The following table sets forth the summary of these forecasts:
2001 2002 2003 2004 2005
------- ------- ------- ------- -------
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AND PER HEAD INFORMATION)
Revenues......................................... $17,300 $18,000 $18,600 $18,800 $19,500
% CHANGE......................................... 4.2% 4.0% 3.3% 1.1% 3.7%
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA).......................... $ 647 $ 759 $ 850 $ 938 $ 1,018
% MARGIN......................................... 3.7% 4.2% 4.6% 5.0% 5.2%
Earnings Before Interest and Taxes (EBIT)........ $ 446 $ 543 $ 619 $ 693 $ 760
% MARGIN......................................... 2.6% 3.0% 3.3% 3.7% 3.9%
Net Income....................................... $ 212 $ 277 $ 332 $ 388 $ 439
Earnings Per Share (EPS)......................... $ 1.98 $ 2.58 $ 3.10 $ 3.61 $ 4.09
Capital expenditures............................. $ 331 $ 300 $ 300 $ 300 $ 300
Beef EBIT/head................................... $ 16.5 $ 15.0 $ 16.5 $ 16.5 $ 17.5
Pork EBIT/head................................... 4.8 4.8 4.8 4.8 4.8
Total Fresh Meats EBIT........................... 309 362 391 420 462
Foodbrands EBIT.................................. 137 181 228 273 297
The IBP management forecasts were not prepared with a view to public
disclosure or compliance with published guidelines of the SEC or the American
Institute of Certified Public Accountants regarding prospective financial
information. In addition the IBP management forecasts were not prepared with
the assistance of or reviewed, compiled or examined by independent accountants.
The IBP management forecasts reflect numerous assumptions, all made by IBP
management, with respect to industry performance, general business, economic,
market and financial conditions and other matters, all of which are difficult
to predict and many of which are beyond IBP's control. Accordingly, there can
be no assurance that the assumptions made in preparing the IBP management
forecasts will prove accurate and actual results may be materially greater or
less than those contained in the IBP management forecasts. Among the specific
factors contributing to the risks and uncertainties inherent in the IBP
management forecasts are: the cost of live cattle and hogs, which depends in
large part on the herd size, weather, feed costs and other factors; health
risks, real and perceived; other raw material costs; ability to reduce expense
without sacrificing profitable revenue; labor costs; effectiveness of
advertising and marketing programs; competition; and changes in laws and
regulations.
The inclusion of the IBP management forecasts in this proxy
statement/prospectus should not be regarded as an indication that IBP, Tyson or
Purchaser or any of IBP's, Tyson's or Purchaser's respective representatives,
or respective officers and directors, consider such information to be an
accurate prediction of future events or necessarily achievable. In light of the
uncertainties inherent in forward looking information of any kind, IBP cautions
against reliance on such information. Except as set forth below, IBP does not
intend to publicly update or revise the IBP management forecasts to reflect
circumstances existing after the date when prepared or to reflect the
occurrence of future events, unless required by law.
JPMorgan calculated the unlevered free cash flows that IBP is expected to
generate during fiscal years 2001 through 2005 based on IBP management
forecasts. JPMorgan also calculated a range of terminal asset values of IBP at
the end of fiscal 2005 by calculating a range of terminal cash flows by valuing
such terminal cash flows as growing perpetuities. JPMorgan developed terminal
cash flows based upon EBIT margins and growth rates taking into account EBIT
margins and growth rates achieved by IBP over the last 10 years and EBIT
margins and growth rates predicted by IBP management for the fiscal years 2000
through 2005. Specifically, JPMorgan utilized a terminal EBIT margin of 3.9%
and terminal sales growth rates of 1.0% to 2.0%. The unlevered free cash flows
and the range of terminal asset values were then discounted to present values
using a range of discount rates from 9.00% to 11.00%, which were chosen by
JPMorgan based upon an analysis of IBP's weighted average cost of capital. The
present value of the unlevered free cash flows and the range of terminal asset
values were then adjusted for IBP's March 31, 2001 excess cash, option exercise
proceeds and total debt.
41
Based on the forecasts and a range of discount rates from 9.50% to 10.50%, the
discounted cash flow analysis indicated a range of equity values of between $23
and $31 per IBP share.
On July 2, 2001, in order to assist Tyson in its presentations to rating
agencies and financial institutions, IBP management updated the foregoing
forecasts. See "Forecasts" in this proxy statement/prospectus. Information from
such updated forecasts is subject to all of the qualifications, caveats and
cautionary language contained in the second and third preceding paragraphs and
such information is incorporated herein by reference. As indicated above, such
updated forecasts were prepared subsequent to JPMorgan's June 26, 2001 opinion.
PUBLIC TRADING MULTIPLES. Using publicly available information, JPMorgan
compared selected financial data, ratios and multiples of IBP with similar
data, ratios and multiples for selected publicly traded companies. JPMorgan
noted that it did not deem these companies fully comparable to IBP and thus
evaluated this information for reference only. Specifically, JPMorgan compared
the selected financial data, ratios and multiples of companies engaged in the
meat processing sector (deemed the "protein peers") with similar data, ratios
and multiples for selected publicly traded companies engaged in the other foods
sectors (distinguished by three categories: "large cap food", "other
agricultural", and "other small cap food").
The "protein peers" companies selected by JPMorgan were:
Smithfield
Hormel Foods Corporation
ConAgra Foods, Inc.
Tyson
The "large cap food" companies selected by JPMorgan were:
Quaker Oats Company
General Mills, Inc.
Hershey Foods Corporation
Campbell Soup Company
Sara Lee Corporation
H. J. Heinz Company
Kellogg Company
The "other agricultural" companies selected by JPMorgan were:
Archer-Daniels-Midland Company
Corn Products International, Inc.
Agrium, Inc.
The "other small cap food" companies selected by JPMorgan were:
McCormick & Company, Inc.
The Earthgrains Company
Del Monte Foods Company
Dole Food Company, Inc.
Suiza Foods Corporation
Interstate Bakeries Corporation
For each of these companies, JPMorgan derived estimates of EBIT, EBITDA, and
net income for calendar years 2001 and 2002 from public equity analyst
estimates. The analysis produced a range of multiples for firm value (which
JPMorgan defined, for purposes of its analyses, as market value of common
equity and preferred stock plus debt net of cash and marketable securities and
minority interest) over various estimated financial benchmarks, including sales
and EBITDA, and for the market value of common equity (price) over earnings
(the price-to-earnings multiple or P/E).
42
For the "protein peers" companies, the analysis indicated firm value to
forecasted 2001 EBITDA multiples of 6.1x to 9.1x and firm value to forecasted
2002 EBITDA of 5.0 to 7.6x. The analysis also showed multiples of price to 2001
earnings of 11.2x to 18.1x, and 2002 P/E ratios of 9.8x to 15.8x. In addition,
the analysis showed multiples of equity value to book value ranging from 1.0x
to 3.8x.
For the "large cap food" companies, the analysis indicated firm value to
forecasted 2001 EBITDA multiples of 8.2x to 13.8x and firm value to forecasted
2002 EBITDA of 8.9x to 12.4x. The analysis also showed multiples of price to
2001 earnings of 13.6x to 25.2x, and 2002 P/E ratios of 13.5x to 22.9x. In
addition, the analysis showed multiples of equity value to book value ranging
from 6.9x to 29.1x.
For the "other agricultural" companies, the analysis indicated firm value to
forecasted 2001 EBITDA multiples of 4.6x to 7.8x and firm value to forecasted
2002 EBITDA of 4.2x to 7.1x. The analysis also showed multiples of price to
2001 earnings of 7.8x to 18.5x, and 2002 P/E ratios of 6.5x to 15.2x. In
addition, the analysis showed multiples of equity value to book value ranging
from 1.1x to 1.4x.
For the "other small cap food" companies, the analysis indicated firm value
to forecasted 2001 EBITDA multiples of 5.2x to 10.2x and firm value to
forecasted 2002 EBITDA of 4.9x to 9.7. The analysis also showed multiples of
price to 2001 earnings of 8.9x to 20.1x, and 2002 P/E ratios of 7.9x to 17.2x.
In addition, the analysis showed multiples of equity value to book value
ranging from 1.7x to 12.0x.
JPMorgan noted that, utilizing IBP management forecasts, the transaction
implies multiples (based on Tyson's closing price of $9.24 on June 22, 2001,
thereby implying a deal value of $26.01 per IBP share) of firm value to
forecasted 2000 EBITDA and 2001 EBITDA of 7.1x and 6.9x, respectively. In
addition, JPMorgan noted that the implied 2001 P/E multiple is 13.1x.
SELECTED TRANSACTION ANALYSIS. Using publicly available information,
JPMorgan examined selected transactions and transaction proposals involving
companies in the meat processing and branded foods industry. JPMorgan noted
that it did not deem these transactions fully comparable to the Transaction and
thus evaluated this information for reference only.
Specifically, JPMorgan reviewed the following transactions:
DATE TARGET ACQUIROR
---- ------ --------
September-00 WLR Foods, Inc. Pilgrim's Pride Corporation
December-99 Corporate Brand Food America, Inc. IBP
December-99 Seaboard Corporation--poultry division ConAgra Foods, Inc.
September-99 Tyson--pork division Smithfield
September-99 Murphy Farms, Inc. Smithfield
July-99 Thorn Apple Valley, Inc. IBP
February-99 Carroll's Foods, Inc. Smithfield
December-98 Ross Breeders Investor Group
July-98 Nestle USA, Inc.--Libby's division International Home Foods, Inc.
January-98 Goodmark Foods, Inc. ConAgra Foods, Inc.
December-97 Schneider Corporation Smithfield
September-97 Hudson Foods, Inc. Tyson
September-97 Golden Poultry Co., Inc. Gold Kist, Inc.
March-97 Foodbrands America, Inc. IBP
September-95 Cargill, Inc.--boiler and McCarty units Tyson
January-94 WLR Foods, Inc. Tyson
August-89 Holly Farms Corporation Tyson
43
JPMorgan calculated a range of multiples of firm value to EBITDA for the
twelve month periods prior to the respective transaction announcements implied
in these transactions. JPMorgan noted that the range of EBITDA multiples
implied by these transactions ranged from 4.9x to 12.6x. JPMorgan noted that,
utilizing IBP management forecasts and based on Tyson's closing price of $9.24
per share on June 22, 2001, the Transaction implies multiples of firm value to
forecasted 2001 EBITDA of 6.9x.
LEVERAGED BUYOUT ANALYSIS. Using IBP management forecasts and JPMorgan
estimates, JPMorgan calculated potential returns to equity investors in
connection with a potential leveraged acquisition of IBP. For purposes of this
analysis, JPMorgan utilized illustrative assumptions regarding maximum leverage
and determined the five year return on initial common equity investment
assuming an acquisition of all stock of IBP at prices ranging from $18 per IBP
share to $24 per IBP share assuming such capital structure constraints.
JPMorgan calculated the free cash flows available for annual debt reduction and
calculated the estimated debt outstanding on December 31, 2006 assuming that
such annual cash flows are utilized to reduce outstanding debt. JPMorgan then
calculated potential firm values for IBP at such time assuming a range of exit
firm value to 2006 EBITDA multiples of 5.0x to 7.0x. Finally, JPMorgan
determined the implied equity values on December 31, 2006 based on the
estimated firm values and forecasted debt outstanding at such time and
calculated the implied returns (determined as internal rates of return) to
initial equity invested on December 31, 2001.
Based on this analysis, JPMorgan established a reference range of $18 per
IBP share to $24 per IBP share which implied a range of annual returns to
equity in leveraged buyout transactions utilizing these assumptions of
approximately 16% to 42%.
PRO FORMA COMBINATION ANALYSIS. JPMorgan analyzed the pro forma impact of
the Transaction on Tyson's cash and reported earnings per share, consolidated
capitalization and financial ratios using IBP management forecasts for IBP and
projections developed on the basis of analysts' consensus earnings estimates
for Tyson as reported by I/B/E/S. Incorporating assumptions with respect to
various structural considerations, transaction and financing costs and Tyson
estimated synergies, the combination was accretive to Tyson's cash and reported
earnings per share in 2002 and 2003.
The summary set forth above is not a complete description of the analyses or
data presented by JPMorgan. The preparation of a fairness opinion is a complex
process and is not necessarily susceptible to partial analysis or summary
description. JPMorgan believes that you must consider its opinion, the summary
and its analyses as a whole. Selecting portions of this summary and these
analyses, without considering the analyses as a whole, would create an
incomplete view of the processes underlying the analyses and opinion. In
arriving at its opinion, JPMorgan considered the results of all of the analyses
as a whole. No single factor or analysis was determinative of JPMorgan's
fairness determination. Rather, the totality of the factors considered and
analyses performed operated collectively to support its determination. JPMorgan
based its analysis on assumptions that it deemed reasonable, including
assumptions concerning general business and economic conditions and industry
specific factors. This summary sets forth under the description of each
analysis the other principal assumptions upon which JPMorgan based that
analysis. Analyses based upon forecasts of future results are inherently
uncertain, as they are subject to numerous factors or events beyond the control
of the parties and their advisors. Accordingly, these forecasts and analyses
are not necessarily indicative of actual future results, which may be
significantly more or less favorable than suggested by those analyses.
Therefore, neither IBP nor JPMorgan nor any other person assumes responsibility
if future results are materially different from those forecasted.
As a part of its investment banking business, JPMorgan and its affiliates
are continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, investments for passive and control
purposes, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes. The Special Committee selected JPMorgan to deliver an
opinion with respect to the proposed merger on the basis of such experience.
During 1998, JPMorgan served as co-underwriter in connection with two note
offerings by Tyson in the aggregate amount of $540 million. On September 14,
2000, JPMorgan's parent company, J.P. Morgan & Co.
44
Incorporated, announced its agreement to merge with The Chase Manhattan
Corporation to form J.P. Morgan Chase & Co. (JPMorgan Chase). Prior to such
merger, JPMorgan advised the Special Committee that affiliates of JPMorgan
Chase may from time to time perform certain financial advisory and other
commercial and investment banking services for Tyson, for which they receive
customary compensation. JPMorgan further advised the Special Committee that
affiliates of JPMorgan Chase may be arranging or providing financing to Tyson
in connection with its acquisition of Tyson. Accordingly, on December 13, 2000,
the Special Committee determined to retain a second financial advisor to assist
in connection with the Special Committee's assessment of the Tyson and
Smithfield bids, and the Special Committee thereafter retained PJSC.
The merger between J.P. Morgan & Co. Incorporated and The Chase Manhattan
Corporation occurred on December 31, 2000. On January 12, 2001, Tyson executed
a credit agreement with various financial institutions (including an affiliate
of JPMorgan Chase), which provided a new 364-day revolving credit facility in
the principal amount of $2.5 billion. The credit agreement was terminated on
March 30, 2001.
JPMorgan and its affiliates may from time to time perform certain financial
advisory and other commercial and investment banking services for IBP and
Tyson. Certain affiliates of JPMorgan have entered into loan agreements (along
with certain other lending institutions) to provide Tyson financing in
connection with the tender offer and the merger, for which such affiliates will
receive customary compensation. In addition, in the ordinary course of their
businesses, JPMorgan and its affiliates may actively trade the debt and equity
securities and senior loans of IBP and Tyson for their own account or for the
accounts of customers and, accordingly, they may at any time hold long or short
positions in such securities or loans.
ENGAGEMENT LETTERS
JPMORGAN. Pursuant to an engagement letter dated July 21, 2000, IBP retained
JPMorgan to render financial advisory services to IBP in connection with the
Rawhide transaction and certain related matters. Pursuant to its engagement,
JPMorgan received $1.0 million at the signing of the engagement and will
receive an additional $4.0 million upon consummation of a transaction. JPMorgan
will also be reimbursed for its reasonable expenses. In addition, IBP will
indemnify JPMorgan and certain related persons against certain liabilities and
expenses in connection with its engagement, including certain liabilities under
the federal securities laws.
PJSC. Pursuant to an engagement letter dated December 15, 2000, IBP formally
retained PJSC to render financial advisory services to IBP in connection with a
possible acquisition of IBP and certain related matters. Pursuant to its
engagement, PJSC received $750,000 for delivery of its fairness opinion to IBP.
PJSC was also reimbursed for its reasonable expenses. In addition, IBP will
indemnify PJSC and certain related persons against certain liabilities and
expenses in connection with its engagement, including certain liabilities under
the federal securities laws. In view of the potential for additional expense,
and in view of the IBP Board's confidence in JPMorgan acting alone, PJSC was
not asked to update its opinion.
EFFECTIVE TIME OF THE MERGER
The merger will become effective when the parties to the merger agreement
file 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, or at a later time that Tyson and IBP may specify in the certificate
of merger.
If the merger agreement is approved at the IBP special meeting, the
effective time will occur as promptly as possible after satisfaction or waiver
of the remaining conditions to the merger contained in the merger agreement.
CERTIFICATE OF INCORPORATION AND BYLAWS
The certificate of incorporation of Purchaser, in effect immediately prior
to the effective time of the merger, will become the certificate of
incorporation of the surviving company. The bylaws of Purchaser in effect
immediately prior to the effective time will be the bylaws of the surviving
company.
45
ACCOUNTING TREATMENT
Tyson will account for the merger under the "purchase" method of accounting
in accordance with accounting principles generally accepted in the United
States. Therefore, the total consideration paid by Tyson in connection with the
tender offer and merger, together with the direct costs of the tender offer and
merger, will be allocated to IBP's assets and liabilities, including
identifiable intangible assets, based on their fair market values, with any
excess being treated as goodwill. The assets and liabilities and results of
operations of IBP will be consolidated into the assets and liabilities and
results of operations of Tyson after the merger.
REGULATORY MATTERS
REGULATORY APPROVALS. IBP and Tyson are not aware of any governmental
license or regulatory permit that appears to be material to the business of IBP
and its subsidiaries that might be adversely affected by Tyson's acquisition of
IBP or, except as set forth below, of any approval or other action by any
government or governmental administrative or regulatory authority or agency,
domestic or foreign, that would be required for Tyson's acquisition of IBP.
Should any such approval or other action be required, IBP and Tyson currently
contemplate that, such approval or other action will be sought. There can be no
assurance that any such approval or other action, if needed, would be obtained,
with or without substantial conditions, or that if such approvals were not
obtained or such other actions were not taken adverse consequences might not
result to IBP's business or certain parts of IBP's business might not have to
be disposed of.
ANTITRUST. Under the HSR Act, and the rules that have been promulgated
thereunder by the Federal Trade Commission, or the FTC, certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice and the FTC
and certain waiting period requirements have been satisfied. The acquisition of
IBP is subject to such requirements. Pursuant to the requirements of the HSR
Act, Tyson filed a Notification and Report Form with respect to the cash tender
offer, the exchange offer and the merger with the Antitrust Division and the
FTC on December 12, 2000. The initial waiting period applicable to the purchase
of IBP shares pursuant to the cash tender offer was scheduled 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. Tyson responded to the request for more information and
certified compliance with that request. The waiting period expired at 11:59
p.m. on January 27, 2001 without any action being taken by the Antitrust
Division.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Tyson's acquisition of the IBP. At
any time before or after the consummation of the merger, the Antitrust Division
or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
merger or seeking divestiture of Tyson's or IBP's substantial assets. Private
parties, including individual states, may also bring legal actions under the
antitrust laws. IBP and Tyson do not believe that the consummation of the
merger will result in a violation of any applicable antitrust laws. However,
there can be no assurance that a challenge to the merger on antitrust grounds
will not be made, or if such a challenge is made, what the result will be.
LISTING OF THE SHARES OF TYSON CLASS A COMMON STOCK ON THE NYSE
In the merger agreement, Tyson has agreed to use its reasonable efforts to
cause shares of Tyson Class A common stock that are to be issued pursuant to
the merger agreement to be listed for trading on the NYSE. Approval for listing
is a condition to the obligations of Tyson, Purchaser and IBP to complete the
merger.
RESALE OF THE SHARES OF TYSON CLASS A COMMON STOCK ISSUED IN THE MERGER; IBP
AFFILIATES
The shares of Tyson Class A common stock to be issued to IBP stockholders in
connection with the merger will be freely transferable under the Securities Act
of 1933, as amended, except for the shares of Tyson Class A
46
common stock issued to any person deemed to be an affiliate of IBP for purposes
of Rule 145 promulgated under the Securities Act at the time of the annual
meeting. These affiliates may not sell their shares of Tyson Class A common
stock acquired in connection with the merger, except pursuant to an effective
registration statement under the Securities Act covering such shares of Tyson
Class A common stock, or in compliance with Rule 145 promulgated under the
Securities Act or another applicable exemption from the registration
requirements of the Securities Act. Pursuant to the merger agreement, IBP will
deliver to Tyson a letter identifying all persons who, at the time of the
special meeting, may be deemed to be its affiliates.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL
In considering the recommendation of the IBP Board to vote to approve the
merger and the merger agreement, you should be aware that certain of IBP's
officers and directors have interests in the merger or have certain
relationships, including those referred to below, that present actual or
potential, or the appearance of actual or potential, conflicts of interest in
connection with the merger. Except for the announcement regarding future
representation on Tyson's board of directors and management team, the IBP Board
was aware of these actual or potential conflicts of interest and considered
them along with other matters in determining to make its recommendation on June
26, 2001.
TREATMENT OF EXISTING OPTIONS
Certain directors, officers and employees have previously received options
to acquire IBP shares under various IBP option plans. At the effective time of
the merger, all outstanding IBP options will be converted into Tyson options.
For a description of the treatment of IBP options in the merger, see "The
Merger Agreement, Stipulation and Voting Agreement - The Merger Agreement -
Employee Stock Options."
OTHER BENEFIT AGREEMENTS
The merger agreement provides that, for a period of at least one year
following the effective time of the merger, Tyson will cause the Purchaser, or
the surviving corporation, and its subsidiaries to provide benefits to their
respective employees which will, in the aggregate, be comparable to those
currently provided by Tyson and its subsidiaries to its employees, provided,
however, this provision does not apply to those employees represented for
purposes of collective bargaining.
INDEMNIFICATION AND INSURANCE
For six years after the effective time of the merger, Tyson will 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 of the merger 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 of the merger, Tyson will
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 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 shall exceed
200% of the per annum rate of premium paid by IBP in its last full fiscal year
for such insurance, then Tyson shall cause the surviving corporation to provide
only such coverage as shall then be available at an annual premium equal to
200% of such rate.
47
REPRESENTATION ON TYSON'S BOARD OF DIRECTORS AND MANAGEMENT TEAM. 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 August 7, 2001, Tyson announced that Mr. Bond
would become Co-Chief Operating Officer of the combined company. On August 15,
2001, Tyson announced that the IBP officers below would have the positions in
the combined company indicated below:
. Eugene D. Leman, head of the Fresh Meats Division at IBP;
. Don Rea, President of Foodbrands Foodservice;
. Roel G. M. Andriessen, President of IBP International;
. Kenneth L. Rose, head of Purchasing; and
. Ken Kimbro, head of Human Resources.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Subject to the limitations and qualifications set forth below, the
discussion in this section is the opinion of Milbank, Tweed, Hadley & McCloy
LLP, counsel to Tyson, and Wachtell, Lipton, Rosen & Katz, counsel to IBP,
insofar as it describes the material United States federal income tax
consequences of the merger to the holders of IBP shares who hold their shares
as capital assets. This discussion is based on the Internal Revenue Code of
1986, as amended, or the Code, applicable Treasury regulations, and
administrative and judicial interpretations thereof, each as in effect as of
the date of this prospectus, all of which may change, possibly with retroactive
effect.
This discussion does not address all aspects of federal income taxation that
may be relevant to a holder of IBP shares in light of that holder's particular
circumstances or to a holder subject to special rules, such as
. a stockholder who is not a citizen or resident of the United States,
. a financial institution or insurance company,
. a tax-exempt organization,
. a dealer or broker in securities,
. a stockholder that holds its IBP shares as part of a hedge, straddle,
constructive sale, conversion transaction or other integrated
transaction, or
. a stockholder that acquired its IBP shares pursuant to the exercise of
options or otherwise as compensation.
In addition, this discussion does not address any state, local or foreign
tax consequences of the merger. We urge each holder of IBP shares to consult
its own tax advisor to determine the particular federal income tax or other tax
consequences to it of the merger.
The merger is the second step in a two-step transaction in which Tyson will
acquire 100% of IBP. The first step of the transaction was the tender offer in
which Tyson purchased up to a number of IBP shares which, together with the IBP
shares previously owned by Tyson, equaled 50.1% of the outstanding IBP shares.
Each holder of IBP shares is urged to consider the tax consequences to it of
the merger in each of the following circumstances: (i) if all of its IBP shares
are exchanged for Tyson Class A common stock pursuant to the merger, or (ii) if
some of its IBP shares were tendered and accepted for purchase in the tender
offer, and its remaining IBP shares are exchanged for Tyson Class A common
stock pursuant to the merger.
The merger and the tender offer will be treated as two steps in an
integrated transaction that are intended to be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
(and Tyson, Purchaser and IBP are intended to be included as parties to that
reorganization within the meaning of Section 368(b) of the Code) assuming the
following factual assumptions (which we refer to as supporting
48
conditions) are met: (i) the merger is completed under the current terms of the
merger agreement, and (ii) the aggregate fair market value of the Tyson Class A
common stock delivered as consideration for the IBP shares in the merger
exceeds a minimum percentage, approximately 40 percent under one United States
Supreme Court case, of the aggregate fair market value of the cash and Tyson
Class A common stock delivered as consideration for all IBP shares in the
tender offer and merger.
In addition to the supporting conditions, Tyson and IBP will use their
reasonable best efforts to cause Milbank, Tweed, Hadley & McCloy LLP and
Wachtell, Lipton, Rosen & Katz, respectively, to deliver legal opinions to the
effect that the tender offer and the merger, taken together, will be treated
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and Tyson, Purchaser and IBP will be included as
parties to that reorganization within the meaning of Section 368(b) of the
Code. In rendering these opinions, Milbank, Tweed, Hadley & McCloy LLP and
Wachtell, Lipton, Rosen & Katz will rely upon representations and covenants to
be made by Tyson, Purchaser and IBP, including those contained in certificates
of officers of Tyson, Purchaser and IBP. In addition, the discussion of the
material U.S. federal income tax consequences of the merger discussed below
assumes the absence of changes in pertinent facts or law between the date of
this prospectus and the effective time of the merger. If any of those
representations, covenants or assumptions is inaccurate, the tax consequences
of the merger could differ materially from those summarized below.
COUNSEL ARE UNABLE TO OPINE AT THIS TIME AS TO WHETHER THE MERGER WILL BE
TREATED FOR FEDERAL INCOME TAX PURPOSES AS PART OF A REORGANIZATION WITHIN THE
MEANING OF SECTION 368(A) OF THE CODE, BECAUSE THE FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER DEPEND IN PART ON FACTS THAT WILL NOT BE AVAILABLE
BEFORE THE COMPLETION OF THE MERGER. The determination as to whether the tender
offer and the merger, taken together, constitute a reorganization, depends on
the fair market value of the Tyson Class A common stock delivered as
consideration in the merger, a fact that will not be known until the effective
time of the merger. In addition, as described below, Tyson and IBP may agree,
under Section 12.03(c) of the merger agreement, to cause Purchaser to merge
into IBP, instead of having IBP merge into Purchaser. That change in the
direction of the merger would prevent the merger from being treated as part of
a reorganization within the meaning of Section 368(a) of the Code. There can be
no assurances that the merger will be completed, or that the supporting
conditions will be satisfied. If the supporting conditions are not satisfied,
the tax consequences of the merger could differ materially from those discussed
below. The merger is not conditioned on the delivery of the legal opinions
referred to above.
If the merger and tender offer, taken together, are treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code and Tyson, Purchaser and IBP are included as parties to that
reorganization within the meaning of Section 368(b) of the Code, for federal
income tax purposes:
. A holder of IBP shares that did not tender any of its IBP shares in the
tender offer and does exchange all of its IBP shares for Tyson Class A
common stock pursuant to the merger will not recognize any gain or loss
except gain realized with respect to cash received in lieu of fractional
shares.
. A holder of IBP shares that had some of its IBP shares accepted for
tender in the tender offer and exchanges its remaining IBP shares for
Tyson Class A common stock pursuant to the merger will recognize gain
(but not loss) realized in respect of any IBP share but not in excess of
the amount of cash received or deemed received for that IBP share. The
amount of gain realized in respect of any IBP share is the excess of the
amount realized for that IBP share over the holder's tax basis in that
share. The consideration received or deemed received for any one IBP
share, whether tendered in the tender offer or the merger, will be the
amount a holder realizes which is attributable to that share. A holder's
aggregate amount realized is the sum of (i) the amount of cash the
holder received pursuant to the tender offer plus (ii) the fair market
value of Tyson Class A common stock received in the merger. The gain
realized calculation must be made separately for each IBP share
surrendered, and a loss realized on one IBP share may not be used to
offset a gain realized on another IBP share. Under most circumstances, a
holder's gain will be capital gain and will be long-term capital gain if
the holder has held the holder's IBP shares for more than one year.
However, for certain holders, including certain
49
holders who tender only a portion of their IBP shares in the tender
offer and certain holders who actually or constructively own shares in
Tyson (other than the Tyson Class A common stock to be received in the
merger) or who constructively own IBP shares under certain attribution
rules under the Code, such gain might be treated as dividend income.
Stockholders should consult their tax advisors regarding whether any
gain they recognize will be capital gain or dividend income to them.
. If a holder of IBP shares receives cash in lieu of fractional shares of
Tyson Class A common stock in the merger, the holder will be required to
recognize gain or loss measured by the difference between the amount of
cash received in lieu of that fractional share and the portion of the
tax basis of that holder's IBP shares allocable to that fractional
share. This gain or loss will be capital gain or loss provided such
holder's IBP shares were held as a capital asset, and will be long-term
capital gain or loss if the holder has held the IBP shares deemed
exchanged for that fractional share of Tyson Class A common stock for
more than one year at the effective time of the merger.
. A holder of IBP shares will have a tax basis in Tyson Class A common
stock received in the merger equal to the tax basis in its IBP shares
surrendered by that holder in the tender offer and the merger, (A)
reduced by (i) any tax basis in such IBP shares that is allocable to
fractional share interests in Tyson Class A common stock for which cash
is received and (ii) the amount of cash received by such holder, if any,
pursuant to the tender offer, and (B) increased by the amount of gain,
if any, recognized by such holder in the tender offer (but not by gain
recognized upon the receipt of cash in lieu of fractional shares of
Tyson Class A common stock in the merger).
. The holding period for Tyson Class A common stock received in exchange
for IBP shares in the merger will include the holding period for IBP
shares surrendered in exchange therefor.
The tax consequences described above are based on factual assumptions,
including the satisfaction of the supporting conditions. If those factual
assumptions are not satisfied, the federal income tax consequences of the
merger to holders of IBP shares could differ materially from those summarized
above. In particular, the merger may be a taxable transaction for federal
income tax purposes if these factual assumptions are not satisfied.
If the merger is consummated but fails to be treated as a reorganization
within the meaning of Section 368(a) of the Code, or Tyson, Purchaser or IBP is
not included as a party to that reorganization within the meaning of Section
368(b) of the Code, the merger will be a taxable transaction for federal income
tax purposes. In that event, each holder of IBP shares that exchanges IBP
shares for Tyson Class A common stock in the merger will generally recognize
gain or loss measured by the difference between the fair market value of Tyson
Class A common stock received (together with any cash received in lieu of
fractional shares) and such stockholder's adjusted tax basis in the IBP shares
exchanged in the merger. The gain or loss will be capital gain or loss, and
will be long-term capital gain or loss if such IBP shares were held for more
than one year at the effective time of the merger. Stockholders should consult
their tax advisors regarding the treatment of any loss recognized.
Pursuant to Section 12.03(c) of the merger agreement, at any time prior to
the effective time of the merger, Tyson and IBP can agree to amend the merger
agreement and require Purchaser to merge into IBP with IBP becoming a
wholly-owned subsidiary of Tyson. If Tyson and IBP exercise their rights under
Section 12.03(c) of the merger agreement, the merger will be a taxable
transaction for federal income tax purposes, with the tax consequences
described in the immediately preceding paragraph.
The federal income tax discussion set forth above is based upon present law.
Due to the individual nature of tax consequences, you are urged to consult your
tax advisors as to the specific tax consequences to you of the merger,
including the effects of applicable state, local or other tax laws.
50
APPRAISAL RIGHTS
Appraisal rights will not be available to IBP stockholders in connection
with the merger if both of the following are true:
. at the date fixed to determine the stockholders entitled to notice of
and to vote on the merger, the IBP shares are either listed on a
national securities exchange or traded on Nasdaq, and
. the shares of Tyson Class A common stock at the effective time of the
merger are either listed on a national securities exchange or traded on
Nasdaq.
As of the date of this proxy statement/prospectus, the IBP shares and the Tyson
Class A common stock are each listed on the NYSE. Neither Tyson nor IBP has any
reason to believe that its shares will not be listed on the NYSE at any time
prior to the effective time.
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 take such
actions as it deems appropriate under the circumstances. Except as described
above, in the next paragraph or elsewhere in this proxy statement/prospectus,
Tyson has no present plans or proposals that would relate to or result in an
extraordinary corporate transaction involving IBP or any of its subsidiaries
(such as a merger, reorganization, liquidation, relocation of any operations or
sale or other transfer of a material amount of assets), any change in the IBP
Board or management, any material change in IBP's capitalization or dividend
policy or any other material change in IBP's corporate structure or business.
The merger agreement provides that, promptly upon the purchase of and
payment for IBP shares representing, together with the IBP shares previously
owned by Tyson, up to 50.1% of the outstanding IBP shares, by Purchaser
pursuant to the tender offer and from time to time thereafter, IBP will,
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, upon request by Tyson, use its reasonable best efforts to take all
actions necessary to cause a majority of the IBP Board to consist of Tyson's
designees, including accepting the resignations of those incumbent directors
designated by IBP or increasing the size of the IBP Board and causing the Tyson
designees to be elected. Effective as of August 6, 2001, John Tyson, Don Tyson,
Greg Lee, Les R. Baledge and Steve Hankins were appointed to the IBP Board, and
Martin Massengale, Wendy Gramm, John Jacobson and Eugene Leman resigned from
the IBP Board. Please see "Recent Developments--Acquisition Update" in this
proxy statement/prospectus.
EXCHANGE PROCEDURES
Soon after the closing of the merger, Wilmington Trust Company will send a
letter of transmittal, which is to be used to exchange IBP stock certificates
for Tyson stock certificates, to each former IBP stockholder. The letter of
transmittal will contain instructions explaining the procedure for surrendering
the IBP stock certificates.
YOU SHOULD NOT RETURN STOCK CERTIFICATES WITH THE
ENCLOSED PROXY CARD.
IBP stockholders who surrender their stock certificates together with a
properly completed letter of transmittal will receive stock certificates
representing the shares of Tyson Class A common stock into which their shares
of IBP common stock have been converted in the merger. After the merger, each
certificate that previously represented IBP shares will represent only the
right to receive the shares of Tyson Class A common stock into which those IBP
shares have been converted.
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Tyson will only deliver shares of Tyson Class A common stock in exchange for
IBP shares to the registered holder of IBP stock certificates unless
. the certificates representing the IBP shares surrendered are properly
endorsed or are otherwise in proper form for transfer, and
. the person other than the registered holder of the IBP stock certificate
requesting delivery pays to Wilmington Trust Company any transfer or
other taxes required as a result of the delivery to a person other than
the registered holder of the surrendered stock certificate or establish
to the satisfaction of Wilmington Trust Company that such tax has been
paid or is not payable.
Tyson will not pay dividends to holders of IBP stock certificates in respect
of the shares of Tyson Class A common stock into which the IBP shares
represented by those certificates have been converted until the IBP stock
certificates are surrendered to Wilmington Trust Company.
After the merger becomes effective, IBP will not register any further
transfers of IBP shares. Any certificates after the effective time of the
merger will be exchanged for shares of Tyson Class A common stock.
Wilmington Trust Company will exchange IBP shares represented by a lost,
stolen or destroyed stock certificate upon
. delivery by the registered holder of the lost, stolen or destroyed stock
certificate of an affidavit attesting that such certificate has been
lost, stolen or destroyed, and
. if required by Tyson, the posting by such person of a bond in such
reasonable amount as Tyson may direct as indemnity against any claim
that may be made against Tyson with respect to such lost, stolen or
destroyed certificate.
Tyson will not issue fractional shares in the merger. Instead, Wilmington
Trust Company will determine the excess of the number of full shares of Tyson
Class A common stock delivered as part of the merger over the number of full
shares of Tyson Class A common stock distributed to holders of IBP shares. As
soon as practicable after the effective time of the merger, Wilmington Trust
Company will sell these excess shares of Tyson Class A common stock on the
NYSE. Wilmington Trust Company will determine the portion of the net proceeds
from the sale of the excess shares of Tyson Class A common stock that each
holder of IBP shares is entitled, if any, by multiplying the net proceeds by a
fraction, the numerator of which is the amount of the fractional share interest
to which a holder of IBP shares is entitled and the denominator of which is the
aggregate amount of fractional share interests to which all holders of IBP
shares are entitled. After determining the amount of cash to be paid to
stockholders otherwise entitled to a fractional share of Tyson Class A common
stock, Wilmington Trust Company will pay those amounts to such holders of IBP
shares.
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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 TYSON LIMITED PARTNERSHIP ON
JANUARY 1, 2001). THE FOLLOWING DESCRIPTIONS OF THE MERGER AGREEMENT AND
STIPULATION ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE ACTUAL MERGER
AGREEMENT AND STIPULATION WHICH ARE INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS. A COPY OF THE MERGER AGREEMENT IS ATTACHED AS APPENDIX A
TO THIS PROXY STATEMENT/PROSPECTUS AND A COPY OF THE STIPULATION IS ATTACHED AS
APPENDIX B TO THIS PROXY STATEMENT/PROSPECTUS. WE URGE YOU TO READ CAREFULLY
THE MERGER AGREEMENT AND STIPULATION BECAUSE THOSE DOCUMENTS, AND NOT THIS
DOCUMENT, ARE THE LEGAL DOCUMENTS THAT GOVERN THE MERGER.
THE MERGER AGREEMENT
The merger agreement provided for the making of the tender offer.
Purchaser's obligation to accept for payment and pay for IBP shares tendered
pursuant to the tender offer was subject to the satisfaction or waiver of the
condition that there shall be validly tendered in accordance with the terms of
the tender offer, prior to the expiration date of such tender offer and not
withdrawn, a number of IBP shares that, together with the IBP shares then owned
by Tyson and/or Purchaser, represents 50.1% of the IBP shares outstanding
(referred to in this proxy statement/prospectus as 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, any condition to
the tender 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 tender offer or the merger, decreased the price per IBP share,
increased the Minimum Condition or resulted in the acquisition of more than
50.1% of the issued and outstanding IBP shares pursuant to the tender offer,
imposed additional conditions to the tender offer or amended any term or any
condition to the tender offer in a manner materially adverse to the holders of
the IBP shares.
Under the merger agreement, Purchaser would have the right, without the
consent of IBP, to extend the tender offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff of the SEC
applicable to the tender offer or any period required by applicable law. Unless
the merger agreement had been terminated, Purchaser was required to extend the
tender offer from time to time in the event that, at a then-scheduled
expiration date, all of the conditions to the tender 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
tender offer to be satisfied. Except as provided in the merger agreement,
Purchaser was obligated not to terminate the tender offer without purchasing
IBP shares pursuant to the tender 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 consecutive 15-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
53
shares of Tyson Class A common stock in exchange for IBP shares tendered
pursuant to the exchange offer would have been subject only to Purchaser having
accepted for payment, and paying for, IBP shares tendered pursuant to the
tender offer and certain other conditions.
RECOMMENDATION
At a meeting of directors of IBP on January 1, 2001, upon the unanimous
recommendation of the Special Committee, the IBP Board unanimously (i)
determined that each of the merger agreement, the tender offer, the exchange
offer and the merger were fair to, and in the best interest of, the holders of
IBP shares, (ii) approved the merger agreement and the transactions
contemplated thereby, including each of the tender offer, the exchange offer
and the merger and (iii) resolved to recommend that the stockholders of IBP
accept the tender offer and the exchange offer, tender their IBP shares in the
tender offer and the exchange offer and that, following consummation of the
tender offer and the exchange offer, the stockholders of IBP adopt the merger
agreement and vote in favor of the merger.
THE MERGER
Under the terms of the merger agreement, as soon as practicable after the
purchase of the IBP shares pursuant to the tender 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 would be the surviving
corporation.
Each IBP share outstanding at the effective time of the merger (other than
IBP shares owned by Tyson or any of its subsidiaries, including Purchaser, or
by IBP as treasury stock, all of which would 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 consecutive 15-trading-days ending
on the fifth trading day immediately preceding the effective time of the
merger.
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 tender 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 (referred to in this proxy statement/prospectus as 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 (referred to in this
proxy statement/prospectus as the "Cash Consideration") for each IBP share or a
number of shares of Tyson Class A common stock (referred to in this proxy
statement/prospectus as "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 consecutive 15-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 Delaware law, 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 elected to pursue appraisal rights under Delaware law,
54
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 elect 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 of the merger, (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
(referred to in this proxy statement/prospectus as 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 an option (referred to in
this proxy statement/prospectus as 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 of the merger (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 would assume the obligations of
IBP under the stock option plans of IBP, each of which would continue in effect
after the effective time of the merger, and all references to IBP in such
plans, and any option granted thereunder, would be deemed to refer to Tyson,
where appropriate. The other terms of each such IBP Option, and the plans under
which they were issued, would continue to apply in accordance with their terms.
Under the merger agreement, prior to the effective time of the merger, 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 of the merger, 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 Exchange Act of 1934, as
amended, Tyson would administer 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, IBP made customary representations and
warranties to Tyson, including representations relating to its organization and
governmental qualification and subsidiaries; its articles of incorporation and
bylaws; capitalization; corporate authorizations; absence of conflicts;
required filings and consents; compliance with laws; SEC filings; financial
statements; absence of certain changes or events (including any material
adverse effect on the financial condition, business, assets or results of
operations of IBP); absence of undisclosed liabilities; litigation; employee
benefit plans; tax matters; labor matters; intellectual property; environmental
matters; insurance and other matters.
55
Certain of IBP's representations and warranties were qualified as to
"materiality" or "Material Adverse Effect." When used in connection with IBP or
any of its subsidiaries, the term "Material Adverse Effect" means any effect
that would be materially adverse to the financial condition, business, assets,
liabilities or results of operations of IBP and its subsidiaries taken as a
whole.
In the merger agreement, Tyson made customary representations and warranties
to IBP, including representations relating to its corporate organization and
subsidiaries; authority relative to the merger agreement; absence of conflicts;
capitalization; SEC filings; financial statements; compliance with laws;
absence of certain changes or events (including any material adverse effect on
the financial condition, business, assets or results of operations of IBP);
absence of material liabilities; adequate funding; ownership of IBP stock;
finders fees and other matters.
Certain of Tyson's representations and warranties were qualified as to
"materiality" or "Parent Material Adverse Effect." When used in connection with
IBP or any of its subsidiaries, the term "Parent Material Adverse Effect" means
any effect that would be materially adverse to the financial condition,
business, assets, liabilities or results of operations of Tyson and its
subsidiaries taken as a whole.
COVENANTS OF IBP
Pursuant to the merger agreement, IBP agreed to comply with various
covenants.
CONDUCT OF IBP. Prior to the date that the Tyson 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, and IBP would not and would not permit
its subsidiaries to, among other things:
(a) amend its organizational documents;
(b) make any acquisitions for an amount in excess of $5 million in the
aggregate, or sell, lease or otherwise dispose of a subsidiary, assets or
securities for an amount in excess of $20 million in the aggregate;
(c) make any investment in an amount in excess of $20 million in the
aggregate or purchase any property or assets of any other individual or
entity for an amount in excess of $20 million in the aggregate;
(d) waive, release, grant, or transfer any rights of material value other
than in the ordinary course of business consistent with past practice;
(e) modify any existing material license, lease, contract, or other
document other than in the ordinary course of business consistent with past
practice;
(f) incur, assume or prepay an amount of long-term or short-term debt in
excess of $150 million in the aggregate;
(g) assume, guarantee, endorse or otherwise become liable or responsible
for the obligations of any other person which, are in excess of $5 million
in the aggregate;
(h) make any loans, advances or capital contributions to, or investments
in, any other person which are in excess of $20 million in the aggregate;
(i) make any new capital expenditures which, individually or in the
aggregate, would exceed $200 million in the first six months of the 2001
calendar year;
(j) 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;
56
(k) adopt or amend any material bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or employee benefit plan, or increase in any manner
the compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any existing plan or arrangement;
(l) pay, discharge or satisfy any material claims, liabilities or
obligations;
(m) approve any new labor agreements;
(n) take any action other than in the ordinary course of business and
consistent with past practices with respect to accounting policies or
procedures; or
(o) knowingly take or agree or commit to take any action that would make
any representation and warranty of IBP under the merger agreement inaccurate
in any material respect at, or as of any time prior to, the effective time
of the merger.
IBP STOCKHOLDER MEETING. Pursuant to the merger agreement, IBP would cause a
meeting of its stockholders to be duly called and held as soon as reasonably
practicable after consummation of the tender offer and exchange offer for the
purpose of voting on the approval and adoption of the merger agreement and the
merger, if such meeting were required. The IBP Board would recommend approval
and adoption of the merger agreement and the merger by IBP's stockholders and
the IBP Board would not withdraw such recommendation.
ACCESS TO INFORMATION. From the date of the merger agreement until the
effective time of the merger, IBP would (a) give Tyson and its counsel,
financial advisors, auditors and other authorized representatives reasonable
access during normal business hours to the offices, properties, books and
records of IBP and its subsidiaries, (b) provide such Tyson representatives
reasonable access to and the right to consult with representatives of IBP
handling any labor negotiations with any union representing employees of IBP,
(c) furnish to Tyson and such Tyson representatives such financial and
operating data and other information as such persons might reasonably request
in order to complete the transactions contemplated by the merger agreement and
(d) instruct IBP's employees, counsel and financial advisors to cooperate with
Tyson in its investigation of the business of IBP and its subsidiaries;
provided that (i) any information provided to Tyson or such Tyson
representatives would be subject to the confidentiality agreements dated
December 4, 2000 and December 18, 2000 between it and Tyson and (ii) Tyson
would inform such Tyson representatives receiving such information of the terms
of such confidentiality agreements and would be responsible for any breach by
such Tyson representatives of such confidentiality agreements.
OTHER TENDER 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
(as 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 tender
offer and the merger contemplated by the merger agreement.
Notwithstanding the foregoing, the IBP Board could, prior to the acceptance
for payment of IBP shares pursuant to the tender 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
57
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
stockholders of IBP who wish to receive cash for their IBP shares, tender their
IBP shares in the tender 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 (as defined below), 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,
was then committed or was in the good-faith judgment of the IBP Board,
reasonably capable of being obtained by the person making such Acquisition
Proposal.
NOTICES OF CERTAIN EVENTS. IBP would promptly notify Tyson of (a) any notice
or other communication from any person alleging that the consent of such person
is or may be required in connection with the transactions contemplated by the
merger agreement, or (b) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by the merger agreement; (c) any actions, suits,
claims, investigations or proceedings commenced or, to the best of its
knowledge threatened against, relating to or involving or otherwise affecting
IBP or any subsidiary of IBP which, if pending on the date of the merger
agreement, would have been required to be disclosed or which related to the
consummation of the transactions contemplated by the merger agreement.
TAX MATTERS. The merger agreement required that, except as permitted in the
merger agreement, as required by law, as in the ordinary course of business
consistent with past practice or as would not have a material adverse effect,
without the prior written consent of Tyson, such consent not to be unreasonably
withheld, neither IBP nor any of its subsidiaries would make or change any
material tax election, change any annual tax accounting period, adopt or change
any method of tax accounting, file any amended tax returns or claims for tax
refunds, enter into any closing agreement, surrender any tax claim, audit or
assessment, surrender any right to claim a tax refund, offset or other
reduction in tax liability surrendered, consent to any extension or waiver of
the limitations period applicable to any tax claim or assessment or take or
omit to take any other action, if any such election, action or omission would
have the effect of increasing the tax liability or reducing any tax asset of
IBP or any of its subsidiaries.
IBP and each of its subsidiaries would establish or cause to be established
in accordance with generally accepted accounting principles in the U.S. on or
before the effective time of the merger an adequate accrual for all taxes due
with respect to any tax period prior to the effective time of the merger or for
any period beginning before, and ending after, the effective time of the
merger.
Neither IBP nor any of its subsidiaries would take any action that would
reasonably be likely to prevent the tender offer, the exchange offer and the
merger, taken together, from qualifying as a reorganization within the meaning
of Section 368(a) of the Code and, prior to the effective time of the merger,
IBP and its subsidiaries will use their reasonable best efforts to cause the
tender offer, the exchange offer and the merger, taken together, to so qualify.
IBP would use its reasonable best efforts to cause Wachtell, Lipton, Rosen &
Katz to provide an opinion, on the basis of certain facts, representations and
assumptions set forth in such opinion, dated the effective time of the merger,
to the effect that the tender offer, the exchange offer and the merger, taken
together, would be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and that each of Tyson, the
Purchaser and IBP would be a party to the reorganization within the meaning of
Section
58
368(b) of the Code. IBP would use its reasonable best efforts to provide to
Wachtell, Lipton, Rosen & Katz and Milbank, Tweed, Hadley & McCloy LLP a
certificate containing representations reasonably requested by such counsel in
connection with the opinions to be delivered pursuant to the merger agreement.
AFFILIATES. The merger agreement required that, at least 30 days prior to
the effective time of the merger, IBP would use its reasonable best efforts to
(a) deliver to Tyson a letter identifying all known persons who might be deemed
affiliates of IBP for the purposes of Rule 145 of the Securities Act and (b)
obtain a written agreement in an agreed upon form from each person who might be
so deemed, as soon as practicable and, in any event, prior to the effective
time of the merger.
CONFIDENTIALITY. IBP agreed that the confidentiality agreements dated
December 4, 2000 and December 18, 2000 between it and Tyson would continue in
full force and effect prior to the effective time of the merger and after any
termination of the merger agreement.
COVENANTS OF TYSON
Pursuant to the merger agreement, Tyson agreed to comply with various
covenants.
TYSON STOCKHOLDER MEETING. Tyson would cause a meeting of its stockholders
to be duly called and held as soon as reasonably practicable for the purpose of
voting on the issuance of Tyson Class A common stock in the exchange offer, the
merger and pursuant to Tyson Options after the merger. The board of directors
of Tyson would recommend approval of the issuance of Tyson Class A common stock
in the exchange offer and the merger pursuant to the merger agreement and would
not withdraw such recommendation.
CONFIDENTIALITY. Tyson agreed that the confidentiality agreements dated
December 4, 2000 and December 18, 2000 between it and IBP would continue in
full force and effect prior to the effective time of the merger and after any
termination of the merger agreement.
VOTING OF IBP SHARES. Each of Tyson and Purchaser agreed to vote all IBP
shares beneficially owned by it or any of its subsidiaries in favor of adoption
of the merger agreement at the IBP stockholder meeting, and at any adjournment.
DIRECTOR AND OFFICER LIABILITY. For six years after the effective time of
the merger, 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 of the merger 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 of the merger, 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 of the merger covering
each such officer and director currently covered by 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.
OBLIGATIONS OF PURCHASER. Tyson would take all action necessary to cause
Purchaser to perform its obligations under the merger agreement and to
consummate the merger on the terms and conditions set forth in the merger
agreement.
59
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 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 of the merger or the termination of the
merger agreement, other than IBP shares purchased pursuant to the tender offer
or the exchange offer.
NOTICES OF CERTAIN EVENTS. Tyson would promptly notify IBP of (a) any notice
or other communication from any person alleging that the consent of such person
is or may be required in connection with the transactions contemplated by the
merger agreement, (b) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by the merger agreement, and (c) any actions, suits, claims,
investigations or proceedings commenced or, to the best of its knowledge
threatened against, relating to or involving or otherwise affecting Tyson or
any of its subsidiaries which related to the consummation of the transactions
contemplated by the merger agreement.
REORGANIZATION MATTERS. Neither Tyson nor any of its subsidiaries would take
any action that would reasonably be likely to prevent the tender offer, the
exchange offer and the merger, taken together, from qualifying as a
reorganization within the meaning of Section 368(a) of the Code and, prior to
the effective time of the merger, Tyson and its subsidiaries will use their
reasonable best efforts to cause the tender offer, the exchange offer and the
merger, taken together, to so qualify. Tyson would use its reasonable best
efforts to cause Milbank, Tweed, Hadley & McCloy LLP to provide an opinion, on
the basis of certain facts, representations and assumptions set forth in such
opinion, dated the effective time of the merger, to the effect that the tender
offer, the exchange offer and the merger, taken together, would be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and that each of Tyson, the Purchaser and IBP would be a
party to the reorganization within the meaning of section 368(b) of the Code.
Tyson would use its reasonable best efforts to provide to Wachtell, Lipton,
Rosen & Katz and Milbank, Tweed, Hadley & McCloy LLP a certificate containing
representations reasonably requested by such counsel in connection with the
opinions to be delivered pursuant to the merger agreement.
INFORMATION RELATING TO THE TENDER OFFER. Tyson would cause any depository
or agent effecting the tender offer, to provide to IBP promptly as requested
from time to time by IBP current information regarding the status of the tender
offer and the exchange offer and the number of IBP shares tendered and not
validly withdrawn.
CONDUCT OF TYSON. From the date of the merger agreement until the effective
time of the merger, Tyson would conduct its business in the ordinary course
consistent with past practice and would use its reasonable best efforts to
preserve intact its business organizations and relationships with third parties
and to keep available the services of its present officers and employees.
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
tender offer and the exchange offer, the merger agreement as originally
executed on January 1, 2001 provided that IBP would promptly prepare its proxy
statement (referred to in this proxy statement/prospectus as the "IBP Proxy
Statement") for soliciting proxies to vote at the special meeting of
stockholders called to vote on the merger agreement and the merger. Tyson would
promptly prepare and file with the SEC the Registration Statement on Form S-4
containing information required by Regulation S-K under the Exchange Act
(referred to in this proxy statement/prospectus as the "Merger Form S-4"), in
which the IBP Proxy Statement would be included. IBP, Tyson and Purchaser would
cooperate with each other in the preparation of the Merger Form S-4 and any
amendment or supplement thereto, and each
60
would notify the other of the receipt of any comments of the SEC with respect
to the Merger Form S-4 and of any requests by the SEC for any amendment or
supplement thereto or for additional information, and would provide to the
other promptly copies of all correspondence between Tyson or IBP, as the case
may be, or any of its representatives and the SEC with respect to the Merger
Form S-4. Tyson would give IBP and its counsel the opportunity to review the
Merger Form S-4 and all responses to requests for additional information by and
replies to comments of the SEC before their being filed with, or sent to, the
SEC. Each of IBP, Tyson and Purchaser would use its best efforts, after
consultation with the other parties, to respond promptly to all such comments
of and requests by the SEC and use its reasonable best efforts to cause the
Merger Form S-4 to be declared effective by the SEC as promptly as practicable.
Tyson would promptly take any action (other than qualifying as a foreign
corporation or taking any action which would subject it to service of process
in any jurisdiction where Tyson was not so qualified or subject) required to be
taken under foreign or state securities or Blue Sky laws in connection with the
issuance of Tyson Class A common stock in the Merger. As promptly as
practicable after the Merger Form S-4 shall have become effective, Tyson and
IBP would fully cooperate with each other to cause the Proxy Statement/
Prospectus contained in the Merger Form S-4 to be mailed to stockholders of IBP
and Tyson. Tyson would advise IBP, promptly after it receives notice thereof,
of (i) the time when the Merger Form S-4 becomes effective, (ii) the issuance
of any stop order with respect to the Merger Form S-4, (iii) the suspension of
the qualification of Tyson Class A common stock for offering or sale in any
jurisdiction, or (iv) any request by the SEC for an amendment of the Merger
Form S-4 or comments thereon and responses thereto or requests by the SEC for
additional information.
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 tender offer or impair such party's ability to
consummate the merger. 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 becomes applicable to the tender 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 tender 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 tender
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 tender offer, the exchange offer or the merger so as to enable
the tender 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 tender 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
tender offer and the merger having expired or been terminated;
61
(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 being pending before the SEC; and
(e) the shares of Tyson Class A common stock to be issued in the merger
having 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 Purchaser had purchased up to a number of IBP shares
representing, together with IBP shares previously owned by Tyson, no less than
50.1% of the issued and outstanding IBP shares.
TERMINATION
The merger agreement could be terminated and the merger could be abandoned
at any time prior to the effective time of the merger (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 tender 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 tender 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
tender 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
tender offer or Purchaser, IBP or Tyson from consummating the merger and
such judgment, injunction, order or decree having become final and
nonappealable; or
(d) by Tyson, prior to the purchase of the IBP shares pursuant to the
tender 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 tender offer, the exchange offer or the merger or its
recommendation that stockholders of IBP tender their IBP shares pursuant to
the tender 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; or
(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, paid to Tyson in immediately available funds the
Termination Fee (as defined below) and the fees required to be paid pursuant
to the merger agreement; or
62
(f) by Tyson, if prior to the acceptance for payment of the IBP shares
under the tender 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; or
(g) by IBP, if prior to the acceptance for payment of the IBP shares
under the tender 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 certain conditions to the tender offer (which would be construed to apply
to Tyson); or
(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 tender 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 (referred to in this proxy
statement/prospectus as 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 (together with the Termination
Fee, referred to in this proxy statement/prospectus as 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 under the Rawhide Agreement.
The advance is 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
subsections (d) or (e) under the section "Termination" or (y) the termination
of the merger agreement pursuant to subsections (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 consummates 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
63
its assets, accept IBP shares for payment in the tender 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 tender offer, the
exchange offer or the merger.
AMENDMENTS
At any time prior to the effective time of the merger, 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 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 TENDER OFFER
The stipulation provided for the making of the tender offer. Purchaser's
obligation to accept for payment and pay for IBP shares tendered pursuant to
the tender offer was subject to the satisfaction, expiration or waiver of
certain conditions.
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, Stipulation and Voting Agreement--The Merger Agreement"
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 effect the cash election merger under the
circumstances described above under "The Merger Agreement, Stipulation and
Voting Agreement--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 that are described above under "The Merger
Agreement, Stipulation and Voting Agreement--The Merger
Agreement--Representations and Warranties", 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, Stipulation and Voting Agreement--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.
64
COVENANTS OF IBP
The stipulation provides that all covenants in the merger agreement shall
remain in full force and effect (subject to a disclosure schedule provided by
IBP to Tyson), except as noted in "The Merger Agreement, Stipulation and Voting
Agreement--Stipulation--Termination Fee," but that only compliance with the
covenants relating to Conduct of IBP, Access to Information, Notices of Certain
Events and Tax Matters would be a condition to the tender offer. See "The
Merger Agreement, Stipulation and Voting Agreement--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 tender offer have been registered in the name of
Tyson or the Purchaser. See "The Merger Agreement, Stipulation and Voting
Agreement--The Merger Agreement--Mutual Covenants of Tyson and IBP" for
additional provisions relating to the IBP Proxy Statement and Merger Form S-4.
IBP shall provide to the institutions providing the financing for the tender
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 tender offer.
TERMINATION
The stipulation provides that the date referred to in (b)(i) above under
"The Merger Agreement, Stipulation and Voting Agreement--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, Stipulation and Voting Agreement--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.
The IBP Board noted that the maximum number of shares of Tyson Class A
common stock that Tyson is required to issue per IBP share in the merger is
2.381 shares of Tyson Class A common stock and that on June 26, 2001 the
aggregate market price of such 2.381 shares was substantially below $30.00 per
IBP share.
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VOTING AGREEMENT
On January 1, 2001, Tyson Limited Partnership and IBP entered into a voting
agreement, a copy of which is filed as an exhibit to the registration statement
of which this proxy statement/prospectus forms a part, pursuant to which Tyson
Limited Partnership agreed to vote all of the shares of Class B common stock,
par value $0.10 per share, of Tyson 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. Tyson Limited Partnership owns 102,598,560 shares
of Tyson Class B common stock representing approximately 90% of the voting
power of Tyson, thus assuring Tyson stockholder approval. On June 27, 2001,
Tyson Limited Partnership delivered a letter, a copy of which is filed as an
exhibit to the registration statement of which this proxy statement/prospectus
forms a part, by which Tyson Limited Partnership consented to the stipulation
and confirmed that the terms of the voting agreement remained in full force and
effect.
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SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of August 20, 2001, to the knowledge of IBP, no person beneficially owned
5% or more of any class of the outstanding voting securities of IBP, except as
follows:
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
-------------- -------------------------------------- ---------- ----------
Common Stock. Tyson Foods, Inc. 54,186,999(1) 50.1%
2210 West Oaklawn Drive
Springdale, AR 72762-6999
Common Stock. Lasso Acquisition Corporation 53,612,799(1) 49.6%
2210 West Oaklawn Drive
Springdale, AR 72762-6999
Common Stock. Archer-Daniels-Midland Company ("ADM") 6,359,137 5.9%
4666 Faries Parkway
Decatur, IL 62526
--------
(1)Tyson and Purchaser have shared investment and voting power over 53,612,799
shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of August 20, 2001, beneficial ownership
of IBP common stock, the sole class of IBP stock, for each director of IBP, and
for each executive officer, and for all directors and executive officers of IBP
as a group. Unless otherwise indicated, the persons named below have sole
voting and investment power with respect to the common stock shown as
beneficially owned by them.
NUMBER OF
IBP SHARES AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER -- POSITION WITH IBP OWNERSHIP (1) CLASS
--------------------------------------------- -------------- ----------
Don Tyson -- Director....................................... 54,186,999(2) 50.1%
Richard L. Bond -- Director and Executive Officer........... 170,058 *(3)
John S. Chalsty -- Director................................. 2,455 *
R. Randolph Devening -- Executive Officer................... 0 *
John Tyson -- Director...................................... 0 *
Craig J. Hart -- Executive Officer.......................... 27,916 *
Greg Lee -- Director........................................ 0 *
Les Baledge -- Director..................................... 0 *
Steve Hankins -- Director................................... 0 *
Robert L. Peterson -- Director and Executive Officer........ 280,577 *
Larry Shipley -- Executive Officer.......................... 53,650 *
Jo Ann R. Smith -- Director................................. 1,865 *
All Directors and Executive Officers As a Group (12 Persons) 54,723,520 50.6%
--------
(1)This number includes stock options granted pursuant to IBP's stock option
plans, and which are exercisable as of August 20, 2001, or within 60 days
thereafter: Mr. Peterson 120,000; Mr. Bond 155,919; Mr. Leman 101,299; Mr.
Shipley 19,280; and Mr. Hart 25,010.
(2)According to a Schedule 13D filed on August 14, 2001, Don Tyson has shared
investment and voting power over the 54,186,999 shares beneficially owned by
Tyson and Purchaser.
(3)Less than 1% of IBP's common stock.
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UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
REFLECTING ACQUISITION OF 100% OF IBP, INC.
The following Unaudited Pro Forma Combined Condensed Balance Sheet at June
30, 2001 (referred to in this proxy statement/prospectus as 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 nine months ended June 30, 2001
(referred to in this proxy statement/prospectus as 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
nine months ended June 30, 2001 (referred to in this proxy statement/prospectus
as the "Tyson 10-Q") and the unaudited financial statements of IBP contained in
IBP's Quarterly Report on Form 10-Q for the twenty-six weeks ended June 30,
2001 (referred to in this proxy statement/prospectus as the "IBP 10-Q") and is
presented as if the merger had occurred on June 30, 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 Tyson's Annual Report on Form 10-K for the fiscal year ended
September 30, 2000 (referred to in this proxy statement/prospectus as 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 (referred to in this proxy statement/prospectus as 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 nine months
ended June 30, 2001 has been derived from the unaudited financial statements of
Tyson contained in the Tyson 10-Q and the financial statements and information
of IBP contained in IBP's Annual Report on Form 10-K for the fiscal year ended
December 30, 2000 (referred to in this proxy statement/prospectus as the "IBP
10-K") and in the IBP 10-Q and the IBP 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 proxy statement/prospectus in
the sections captioned "Selected Financial Data" of each of Tyson and IBP.
68
TYSON FOODS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 2001
(IN MILLIONS OF DOLLARS)
(A) (B) (C) (A)+(B)+(C)
TYSON FOODS, PRO FORMA
- ------------ -------------------------
INC. IBP, INC. ADJUSTMENTS COMBINED
- ---- --------- ----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents.......................... $ 71.2 $ 19.3 $ -- $ 90.5
Accounts receivable................................ 527.8 705.5 -- 1,233.3
Inventories........................................ 972.4 982.9 -- 1,955.3
Other current assets............................... 48.9 93.8 -- 142.7
-------- -------- --------- ---------
Total current assets........................... 1,620.3 1,801.5 -- 3,421.8
-------- -------- --------- ---------
Net property, plant and equipment.................. 2,127.7 1,731.9 -- 3,859.6
Excess of investments over net assets acquired..... 930.2 -- (930.2)(8) --
Identifiable intangibles........................... -- -- 25.0 (1) 25.0
Goodwill........................................... -- 946.7 (946.7)(1) 2,925.6
1,995.4 (1)
930.2 (8)
Other assets....................................... 311.2 172.3 (12.9)(6) 403.6
(67.0)(7)
-------- -------- --------- ---------
Total assets................................... $4,989.4 $4,652.4 $ 993.8 $10,635.6
-------- -------- --------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable...................................... $ 29.5 $1,023.0 $ -- $ 1,052.5
Current portion of long-term debt.................. 16.4 5.8 -- 22.2
Trade accounts payable............................. 331.4 432.1 -- 763.5
Other accrued liabilities.......................... 407.2 392.1 -- 799.3
-------- -------- --------- ---------
Total current liabilities.......................... 784.5 1,853.0 -- 2,637.5
-------- -------- --------- ---------
Long-term debt..................................... 1,614.0 687.6 1,708.4 (2) 4,010.0
Deferred income taxes.............................. 367.8 199.8 -- 567.6
Other liabilities.................................. 78.6 -- -- 78.6
Shareholders' Equity:
Class A common stock............................... 13.8 5.5 (5.5)(3) 26.7
12.9 (4)
Class B common stock............................... 10.3 -- -- 10.3
Capital in excess of par value..................... 734.8 442.5 (442.5)(3) 1,919.3
1,176.1 (4)
8.4 (5)
Retained earnings.................................. 1,730.5 1,537.3 (1,537.3)(3) 1,730.5
Accumulated other comprehensive income............. (8.2) (12.7) 12.7 (3) (8.2)
-------- -------- --------- ---------
2,481.2 1,972.6 (775.2) 3,678.6
Treasury stock..................................... 330.3 60.6 (60.6)(3) 330.3
Unamortized deferred compensation.................. 6.4 -- -- 6.4
-------- -------- --------- ---------
Total shareholders' equity..................... 2,144.5 1,912.0 (714.6) 3,341.9
-------- -------- --------- ---------
Total liabilities and shareholders' equity..... $4,989.4 $4,652.4 $ 993.8 $10,635.6
======== ======== ========= =========
See accompanying notes.
69
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 $16,674.5 $ -- $23,832.3
Cost of Sales................................................ 6,043.4 15,630.5 -- 21,673.9
-------- --------- ------- ---------
1,114.4 1,044.0 -- 2,158.4
Expenses:
Selling, general administrative........................... 765.9 552.0 -- 1,317.9
Other..................................................... -- 31.3 -- 31.3
-------- --------- ------- ---------
Operating income............................................. 348.5 460.7 -- 809.2
Other expenses:
Interest.................................................. 115.0 83.2 119.6(1) 317.8
Other..................................................... (1.2) -- -- (1.2)
-------- --------- ------- ---------
Income before taxes on income, accounting change and
extraordinary loss......................................... 234.7 377.5 (119.6) 492.6
Provision for income taxes................................... 83.5 142.1 (45.4)(2) 180.2
Minority interest............................................ -- -- -- --
-------- --------- ------- ---------
Net income before accounting change and extraordinary loss... $ 151.2 $ 235.4 $ (74.2) $ 312.4
======== ========= ======= =========
Weighted average shares outstanding:
Basic..................................................... 225.0 103.6 354.0
Diluted................................................... 226.0 107.1 357.2
Earnings per share before accounting change and extraordinary
loss
Basic..................................................... $ 0.67 $ 2.24 $ 0.88
Diluted................................................... $ 0.67 $ 2.17 $ 0.87
Earnings per share before accounting change and extraordinary
loss (assumes exchange ratio of 2.381):
Basic..................................................... $ -- $ -- $ 0.88
Diluted................................................... $ -- $ -- $ 0.87
Earnings per share before accounting change and extraordinary
loss (assumes exchange ratio of 1.948):
Basic..................................................... $ -- -- $ 0.94
Diluted................................................... $ -- -- $ 0.94
See accompanying notes.
70
TYSON FOODS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
NINE MONTHS ENDED JUNE 30, 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........................................................ $5,464.8 $12,897.0 $ -- $18,361.8
Cost of sales................................................ 4,708.1 12,214.1 -- 16,922.2
-------- --------- ------ ---------
756.7 682.9 -- 1,439.6
Expenses:
Selling, general and administrative....................... 608.2 511.1 -- 1,119.3
Other..................................................... -- (6.9) -- (6.9)
-------- --------- ------ ---------
Operating income............................................. 148.5 178.7 -- 327.2
Other expenses:
Interest.................................................. 81.1 74.1 89.7 (1) 244.9
Other..................................................... 3.7 -- -- 3.7
-------- --------- ------ ---------
Income before taxes on income, accounting change and
extraordinary loss......................................... 63.7 104.6 (89.7) 78.6
Provision for income taxes................................... 22.3 48.4 (34.1)(2) 36.6
Minority interest............................................ 1.1 -- -- 1.1
-------- --------- ------ ---------
Net income before accounting change and
extraordinary loss......................................... $ 40.3 $ 56.2 $(55.6) $ 40.9
======== ========= ====== =========
Weighted average shares outstanding:
Basic..................................................... 221.7 105.9 350.2
Diluted................................................... 222.3 106.9 352.2
Earnings per share before accounting change and extraordinary
item:
Basic..................................................... $ 0.18 $ 0.53 $ 0.12
Diluted................................................... $ 0.18 $ 0.53 $ 0.12
Earnings per share before accounting charge and extraordinary
item (assumes exchange ratio of 2.381):
Basic..................................................... -- -- $ 0.12
Diluted................................................... -- -- $ 0.12
Earnings per share before accounting charge and extraordinary
item (assumes exchange ratio of 1.948):
Basic..................................................... -- -- $ 0.13
Diluted................................................... -- -- $ 0.12
See accompanying notes.
71
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
(53,612,688 shares at $30)............................ $1,608.4
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 (53,983,689 x 2.381 at $9.25, the average
closing price for Tyson Class A common stock for the
six days subsequent to the stipulation)............... 1,189.0
Estimated acquisition expenses.......................... 167.0
IBP stock options converted to Tyson stock options...... 8.4
IBP stock currently owned by Tyson...................... 12.9
--------
Total acquisition consideration......................... $2,985.7
========
Total purchase price.................................... $2,985.7
Less:
Book value of IBP's net assets acquired................. $1,912.0
To eliminate IBP's goodwill............................. (946.7)
--------
Estimated fair value of the assets of the company
acquired less liabilities assumed (a), (b) and (c).... (965.3)
Identifiable intangible assets (a) and (b).............. (25.0)
--------
Goodwill................................................ $1,995.4
========
-----
(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 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, or the FASB,
approved the final standards resulting from its deliberations on the
business combinations project. The FASB issued Financial Accounting
Standards No. 141 BUSINESS COMBINATIONS, and No. 142, GOODWILL AND OTHER
INTANGIBLE ASSETS, in late July.
Statement 141 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.
(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.
72
(c)Tyson will perform a detailed analysis and measurement of the fair value
of assets and liabilities assumed. Tyson anticipates completing this
analysis in fiscal 2002. This may result in goodwill.
(2)To reflect incremental additional debt required to finance the acquisition.
The amounts reflect the additional borrowings that will be required to
purchase IBP shares for cash of $1,608 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 amount previously reported as excess of investments over net
assets acquired to goodwill.
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 increased interest expense resulting from the acquisition debt of
$1,708 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
$2.2 million in additional interest expense.
(2)To reflect the net tax benefit resulting from the additional interest
expense at Tyson's statutory tax rates of 38%.
(3)The following schedule conforms IBP's most recent fiscal year to Tyson's
fiscal year ended September 30, 2000 (in millions):
(B) (C)
(A) RESTATED RESTATED (A)-(B)+(C)
RESTATED UNAUDITED UNAUDITED UNAUDITED
52 WEEKS 39 WEEKS 39 WEEKS 52 WEEKS
ENDED ENDED ENDED ENDED
12/25/99 9/25/1999 9/23/2000 9/30/00
--------- --------- --------- -----------
Sales........................................... $15,121.7 $10,985.8 $12,538.6 $16,674.5
Cost of sales................................... 14,126.6 10,260.6 11,764.5 15,630.5
--------- --------- --------- ---------
995.1 725.2 774.1 1,044.0
Expenses:
Selling, general and administrative.......... 440.5 310.9 422.4 552.0
Other expense................................ -- -- 31.3 31.3
--------- --------- --------- ---------
Operating income................................ 554.6 414.3 320.4 460.7
Interest expense................................ 67.8 48.7 64.1 83.2
--------- --------- --------- ---------
Income before taxes on income, accounting change
and extraordinary loss........................ 486.8 365.6 256.3 377.5
Provision for income taxes...................... 168.9 124.3 97.5 142.1
--------- --------- --------- ---------
Earnings before accounting change and
extraordinary loss............................ $ 317.9 $ 241.3 $ 158.8 $ 235.4
========= ========= ========= =========
73
(4)The following schedule conforms IBP's most recent interim period to Tyson's
thirty-nine weeks ended June 30, 2001 (in millions):
(B)
RESTATED (C) (A)-(B)+(C)
(A) UNAUDITED UNAUDITED UNAUDITED
53 WEEKS 39 WEEKS 26 WEEKS 9 MONTHS
ENDED ENDED ENDED ENDED
12/30/2000 9/23/2000 6/30/2001 6/30/2001
---------- --------- --------- -----------
Sales........................................... $16,949.7 $12,538.6 $8,485.9 $12,897.0
Cost of sales................................... 15,913.3 11,764.5 8,065.3 12,214.1
--------- --------- -------- ---------
1,036.4 774.1 420.6 682.9
Expenses:
Selling, general and administrative.......... 658.2 422.4 275.3 511.1
Other expense (Income)....................... 31.3 31.3 (6.9) (6.9)
--------- --------- -------- ---------
Operating income................................ 346.9 320.4 152.2 178.7
Interest expense................................ 88.2 64.1 50.0 74.1
--------- --------- -------- ---------
Income before taxes on income, accounting change
and extraordinary loss........................ 258.7 256.3 102.2 104.6
Provision for income taxes...................... 106.0 97.5 39.9 48.4
--------- --------- -------- ---------
Earnings before accounting change and
extraordinary loss............................ $ 152.7 $ 158.8 $ 62.3 $ 56.2
========= ========= ======== =========
74
UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
REFLECTING ACQUISITION FOR CASH OF 50.1% OF IBP, INC.
The following Unaudited Pro Forma Combined Condensed Balance Sheet at June
30, 2001 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 nine months ended June 30, 2001 and,
together with the Pro Forma Balance Sheet, the "Tender Offer Pro Forma
Financial Statements" are presented using the purchase method of accounting to
give effect to the purchase by Tyson of 50.1% of the outstanding common stock
of IBP for cash. The Tender Offer Pro Forma Financial Statements do not reflect
the anticipated acquisition by Tyson of the remaining 49.9% interest in IBP in
the merger contemplated elsewhere in this proxy statement/prospectus.
The Tender Offer 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 nine months ended June 30, 2001 (referred to in this proxy
statement/prospectus as the "Tyson 10-Q") and the unaudited financial
statements of IBP contained in IBP's Quarterly Report on Form 10-Q for the
twenty-six weeks ended June 30, 2001 (referred to in this proxy
statement/prospectus as the "IBP 10-Q") and is presented as if the cash tender
offer had been completed on June 30, 2001. The Tender Offer 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 (referred to in this proxy statement/prospectus as the "IBP Restated
10-Qs"), and is presented as if the cash tender offer had been completed on
October 3, 1999. The Tender Offer Unaudited Pro Forma Combined Condensed Income
Statement for the nine months ended June 30, 2001 has been derived from the
unaudited financial statements of Tyson contained in the Tyson 10-Q and the
financial statements and information of IBP contained in the IBP 10-K, the IBP
10-Q and the IBP Restated 10-Qs.
The pro forma adjustments reflected in the Tender Offer 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 cash tender offer will be based on further evaluations and
may differ substantially from the adjustments presented herein. The Tender
Offer 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 cash tender offer been
consummated as of the dates indicated or of the results that may be obtained in
the future.
The Tender Offer 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 proxy
statement/prospectus in the sections captioned "Selected Financial Data" of
each of Tyson and IBP.
75
TYSON FOODS, INC.
UNAUDITED TENDER OFFER PRO FORMA COMBINED CONDENSED BALANCE SHEET
REFLECTING ACQUISITION FOR CASH OF 50.1% OF IBP, INC.
JUNE 30, 2001
(IN MILLIONS OF DOLLARS)
(A) (B) (C) (A)+(B)+(C)
TYSON FOODS, PRO FORMA
------------ -------------------------
INC. IBP, INC. ADJUSTMENTS COMBINED
---- --------- ----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents.......................... $ 71.2 $ 19.3 $ -- $ 90.5
Accounts receivable................................ 527.8 705.5 -- 1,233.3
Inventories........................................ 972.4 982.9 -- 1,955.3
Other current assets............................... 48.9 93.8 -- 142.7
-------- -------- --------- ---------
Total current assets........................... 1,620.3 1,801.5 -- 3,421.8
-------- -------- --------- ---------
Net property, plant and equipment.................. 2,127.7 1,731.9 -- 3,859.6
Excess of investments over net assets acquired..... 930.2 -- (930.2)(6) --
Goodwill........................................... -- 946.7 830.5 (1) 2,707.4
930.2 (6)
Other assets....................................... 311.2 172.3 (12.9)(4) 403.6
(67.0)(5)
-------- -------- --------- ---------
Total assets................................... $4,989.4 $4,652.4 $ 750.6 $10,392.4
-------- -------- --------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable...................................... $ 29.5 $1,023.0 $ -- $ 1,052.5
Current portion of long-term debt.................. 16.4 5.8 -- 22.2
Trade accounts payable............................. 331.4 432.1 -- 763.5
Other accrued liabilities.......................... 407.2 392.1 -- 799.3
-------- -------- --------- ---------
Total current liabilities.......................... 784.5 1,853.0 -- 2,637.5
-------- -------- --------- ---------
Long-term debt..................................... 1,614.0 687.6 1,708.4 (2) 4,010.0
Deferred income taxes.............................. 367.8 199.8 -- 567.6
Other liabilities.................................. 78.6 -- -- 78.6
Minority interest.................................. -- -- 954.2 (7) 954.2
Shareholders' Equity:
Class A common stock............................... 13.8 5.5 (5.5)(3) 13.8
Class B common stock............................... 10.3 -- -- 10.3
Capital in excess of par value..................... 734.8 442.5 (442.5)(3) 734.8
Retained earnings.................................. 1,730.5 1,537.3 (1,537.3)(3) 1,730.5
Accumulated other comprehensive income............. (8.2) (12.7) 12.7 (3) (8.2)
-------- -------- --------- ---------
2,481.2 1,972.6 (1,972.6) 2,481.2
Treasury stock..................................... 330.3 60.6 (60.6)(3) 330.3
Unamortized deferred compensation.................. 6.4 -- -- 6.4
-------- -------- --------- ---------
Total shareholders' equity..................... 2,144.5 1,912.0 (1,912.0) 2,144.5
-------- -------- --------- ---------
Total liabilities and shareholders' equity..... $4,989.4 $4,652.4 $ 750.6 $10,392.4
======== ======== ========= =========
See accompanying notes.
76
TYSON FOODS, INC.
UNAUDITED TENDER OFFER PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
REFLECTING ACQUISITION FOR CASH OF 50.1% OF IBP, INC.
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 $16,674.5 $ -- $23,832.3
Cost of Sales............................................. 6,043.4 15,630.5 -- 21,673.9
-------- --------- -------- ---------
1,114.4 1,044.0 -- 2,158.4
Expenses:
Selling, general administrative........................ 765.9 552.0 -- 1,317.9
Other.................................................. -- 31.3 -- 31.3
-------- --------- -------- ---------
Operating income.......................................... 348.5 460.7 -- 809.2
Other expenses:
Interest............................................... 115.0 83.2 119.6 (1) 317.8
Other.................................................. (1.2) -- -- (1.2)
-------- --------- -------- ---------
Income before taxes on income, accounting change and
extraordinary loss...................................... 234.7 377.5 (119.6) 492.6
Provision for income taxes................................ 83.5 142.1 (45.4)(2) 180.2
Minority interest......................................... -- -- 155.9(3) 155.9
-------- --------- -------- ---------
Net income before accounting change and extraordinary loss $ 151.2 $ 235.4 $ (230.1) $ 156.5
======== ========= ======== =========
Weighted average shares outstanding:
Basic.................................................. 225.0 103.6 225.0
Diluted................................................ 226.0 107.1 226.0
Earnings per share before accounting change and
extraordinary loss
Basic.................................................. $ 0.67 $ 2.24 $ 0.70
Diluted................................................ $ 0.67 $ 2.17 $ 0.69
See accompanying notes.
77
TYSON FOODS, INC.
UNAUDITED TENDER OFFER PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
REFLECTING ACQUISITION FOR CASH OF 50.1% OF IBP, INC.
NINE MONTHS ENDED JUNE 30, 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................................................. $5,464.8 $12,897.0 $ -- $18,361.8
Cost of sales......................................... 4,708.1 12,214.1 -- 16,922.2
-------- --------- ------ ---------
756.7 682.9 -- 1,439.6
Expenses:
Selling, general and administrative................ 608.2 511.1 1,119.3
Other.............................................. -- (6.9) -- (6.9)
-------- --------- ------ ---------
Operating income...................................... 148.5 178.7 -- 327.2
Other expenses:
Interest........................................... 81.1 74.1 89.7 (1) 244.9
Other.............................................. 3.7 -- -- 3.7
-------- --------- ------ ---------
Income before taxes on income, accounting change and
extraordinary loss.................................. 63.7 104.6 (89.7) 78.6
Provision for income taxes............................ 22.3 48.4 (34.1)(2) 36.6
Minority interest..................................... 1.1 -- 21.0 (3) 22.1
-------- --------- ------ ---------
Net income (loss) before accounting change and
extraordinary loss.................................. $ 40.3 $ 56.2 $(76.6) $ 19.9
======== ========= ====== =========
Weighted average shares outstanding:
Basic.............................................. 221.7 105.9 221.7
Diluted............................................ 222.3 106.9 222.3
Earnings (loss) per share before accounting change and
extraordinary item:
Basic.............................................. $ 0.09 $ 0.53 $ 0.09
Diluted............................................ $ 0.09 $ 0.53 $ 0.09
See accompanying notes.
78
NOTES TO UNAUDITED TENDER OFFER PRO FORMA COMBINED CONDENSED
BALANCE SHEET
REFLECTING ACQUISITION FOR CASH OF 50.1% OF IBP, INC.
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
(53,612,688 shares at $30)............................ $1,608.4
Estimated acquisition expenses.......................... 167.0
IBP stock currently owned by Tyson...................... 12.9
--------
Total acquisition consideration......................... $1,788.3
========
Total purchase price.................................... $1,788.3
Less:
-
Estimated fair value of the assets of the company
acquired less liabilities assumed (a) and (b)......... (957.8)
--------
Goodwill................................................ $ 830.5
========
--------
(a)Based upon currently available information Tyson has assumed for
purposes of these Acquisition Unaudited Pro Forma Financial Statements
that 50.1% at 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 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, or the FASB,
approved the final standards resulting from its deliberations on the
business combinations project. The FASB issued Financial Accounting
Standards No. 141 BUSINESS COMBINATIONS, and No. 142, GOODWILL AND OTHER
INTANGIBLE ASSETS, in late July.
Statement 141 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.
(b)Tyson will perform a detailed analysis and measurement of the fair
value of assets and liabilities assumed. Tyson anticipates completing
this analysis in fiscal 2002. This may result in goodwill.
(2)To reflect incremental additional debt required to finance the acquisition.
The amounts reflect the additional borrowings that will be required to
purchase IBP shares for cash of $1.708 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 reclassify shares of IBP's stock currently owned by Tyson.
(5)To reclassify termination and other fees paid.
(6)To reclassify amount previously reported as excess of investments over net
assets acquired to goodwill.
(7)To record minority interest.
79
NOTES TO UNAUDITED TENDER OFFER PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
REFLECTING ACQUISITION FOR CASH OF 50.1% OF IBP, INC.
The following adjustments are based upon Tyson's preliminary purchase price
allocation as further described below.
(1)To reflect increased interest expense resulting from the acquisition debt of
$1,708 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 $2.2
million in additional interest expense.
(2)To reflect the net tax benefit resulting from the additional interest
expense at Tyson's statutory tax rates of 38%.
(3)The following schedule conforms IBP's most recent fiscal year to Tyson's
fiscal year ended September 30, 2000 (in millions):
(B) (C)
(A) RESTATED RESTATED (A)-(B)+(C)
RESTATED UNAUDITED UNAUDITED UNAUDITED
52 WEEKS 39 WEEKS 39 WEEKS 52 WEEKS
ENDED ENDED ENDED ENDED
12/25/99 9/25/1999 9/23/2000 9/30/00
--------- --------- --------- -----------
Sales........................................... $15,121.7 $10,985.8 $12,538.6 $16,674.5
Cost of sales................................... 14,126.6 10,260.6 11,764.5 15,630.5
--------- --------- --------- ---------
995.1 725.2 774.1 1,044.0
Expenses:
Selling, general and administrative.......... 440.5 310.9 422.4 552.0
Other expense................................ -- -- 31.3 31.3
--------- --------- --------- ---------
Operating income................................ 554.6 414.3 320.4 460.7
Interest expense................................ 67.8 48.7 64.1 83.2
--------- --------- --------- ---------
Income before taxes on income, accounting change
and extraordinary loss........................ 486.8 365.6 256.3 377.5
Provision for income taxes...................... 168.9 124.3 97.5 142.1
--------- --------- --------- ---------
Earnings before accounting change and
extraordinary loss............................ $ 317.9 $ 241.3 $ 158.8 $ 235.4
========= ========= ========= =========
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(4)The following schedule conforms IBP's most recent interim period to Tyson's
thirty-nine weeks ended June 30, 2001 (in millions):
(B)
RESTATED (C) (A)-(B)+(C)
(A) UNAUDITED UNAUDITED UNAUDITED
53 WEEKS 39 WEEKS 26 WEEKS 9 MONTHS
ENDED ENDED ENDED ENDED
12/30/2000 9/23/2000 6/30/2001 6/30/2001
---------- --------- --------- -----------
Sales........................................... $16,949.7 $12,538.6 $8,485.9 $12,897.0
Cost of sales................................... 15,913.3 11,764.5 8,065.3 12,214.1
--------- --------- -------- ---------
1,036.4 774.1 420.6 682.9
Expenses:
Selling, general and administrative.......... 658.2 422.4 275.3 511.1
Other expense (income)....................... 31.3 31.3 (6.9) (6.9)
--------- --------- -------- ---------
Operating income................................ 346.9 320.4 152.2 178.7
Interest expense................................ 88.2 64.1 50.0 74.1
--------- --------- -------- ---------
Income before taxes on income, accounting change
and extraordinary loss........................ 258.7 256.3 102.2 104.6
Provision for income taxes...................... 106.0 97.5 39.9 48.4
--------- --------- -------- ---------
Earnings before accounting change and
extraordinary loss............................ $ 152.7 $ 158.8 $ 62.3 $ 56.2
========= ========= ======== =========
81
FORECASTS
At Tyson's request, IBP prepared, on July 2, 2001, certain updated forecasts
of projected financial data for the fiscal years 2001 through 2003 to be used
by Tyson in connection with its presentations to rating agencies and financial
institutions. The updated forecasts revised the forecasts of IBP that were used
by JPMorgan in connection with the preparation of its opinion as discussed in
"The Merger--Opinion of the Financial Advisor to the IBP Board" in this proxy
statement/prospectus. The updated forecasts include EBIT forecasts as follows:
FISCAL YEARS
---------------
ITEM 2001 2002 2003
---- ---- ---- ----
(IN MILLIONS)
Foodbrands EBIT.............. $ 75* $141 $185
Fresh Meats EBIT**........... 339 392 401
Total EBIT................ $414 $533 $586
--------
* Includes $7 million gain on sale of assets.
** Fresh Meats EBIT includes Beef, Pork, Hides, Case Ready, Lakeside and
Logistics/Other.
The updated forecasts for 2001 were revised with the benefit of known
results for nearly half the year, and reflects improvements in Fresh Meats
(principally in Logistics/Other) and lesser performance in Foodbrands due to
higher than previously expected raw material costs and higher than previously
expected overhead costs and expenses. The 2002 and 2003 updated forecasts
reflect enhancements in Fresh Meats performance primarily due to anticipated
increases in Logistics/Other, and improved pork performance due to anticipated
margin improvement. The updated forecasts for 2002 and 2003 also reflect an
anticipated more difficult operating environment for Foodbrands' businesses
than was previously expected, characterized by more competitive finished
product pricing, with anticipated moderation in raw material pricing.
The updated forecasts were not prepared with a view to public disclosure or
compliance with published guidelines of the SEC or the American Institute of
Certified Public Accountants regarding prospective financial information. In
addition, the updated forecasts were not prepared with the assistance of or
reviewed, compiled or examined by, independent auditors. The updated forecasts
reflect numerous assumptions, all made by IBP management, with respect to
industry performance, general business, economic, market and financial
conditions and other matters, all of which are difficult to predict and many of
which are beyond IBP's control. Accordingly, there can be no assurance that the
assumptions made in preparing the updated forecasts will prove accurate, and
actual results may be materially greater or less than those contained in the
updated forecasts. Among the specific factors contributing to the risks and
uncertainties inherent in the updated forecasts are: the cost of live cattle
and hogs, which depends in large part on herd size, weather, feed costs and
other factors; health risks, real and perceived; other raw material costs;
ability to reduce expense without sacrificing profitable revenue; labor costs;
effectiveness of advertising and marketing programs; competition; and changes
in laws and regulations.
The inclusion of the updated forecasts in this proxy statement/prospectus
should not be regarded as an indication that IBP, Tyson or Purchaser or any of
IBP's, Tyson's or Purchaser's respective representatives, or respective
officers and directors, consider such information to be an accurate prediction
of future events or necessarily achievable. In light of the uncertainties
inherent in forward looking information of any kind, we caution against
reliance on such information. IBP has advised Tyson that it does not intend to
publicly update or revise the updated forecasts to reflect circumstances
existing after the date when prepared or to reflect the occurrence of future
events, unless required by law.
82
DESCRIPTION OF TYSON'S CAPITAL STOCK
The following statements are brief summaries of certain provisions with
respect to Tyson's capital stock. The summaries do not purport to be complete
and such statements are qualified in their entirety by reference to Tyson's
Restated Certificate of Incorporation, as amended, and the Second Amended and
Restated By-Laws, copies of which have been filed as exhibits to the
registration statement of which this proxy statement/prospectus forms a part.
COMMON STOCK
Tyson currently has issued and outstanding two classes of capital stock,
Tyson Class A common stock, par value $0.10 per share and Tyson Class B common
stock, par value $0.10 per share. The Tyson certificate of incorporation
authorizes the issuance of up to 900 million shares of each of Tyson Class A
common stock and Tyson Class B common stock. The holders of Tyson Class A
common stock are entitled to one vote, and the holders of Tyson Class B common
stock are entitled to ten (10) votes, for each share held of record on all
matters submitted to a vote of stockholders, including the election of
directors. Except as required by law, holders of Tyson Class A common stock and
Tyson Class B common stock vote together as a single class. Holders of Tyson
Class A common stock and holders of Tyson Class B common stock do not have
cumulative voting rights. Holders of Tyson Class A common stock and Tyson Class
B common stock are entitled to receive such dividends and other distributions
as may be determined by the Tyson board of directors out of any funds legally
available therefor; provided, however, that no cash dividend may be paid on
Tyson Class B common stock unless a cash dividend is simultaneously paid on
Tyson Class A common stock, and the amount of the cash dividend paid on Tyson
Class B common stock cannot exceed 90% of the cash dividend simultaneously paid
on Tyson Class A common stock.
Upon liquidation of Tyson, the holders of Tyson Class A common stock and
Tyson Class B common stock share ratably in the assets, if any, remaining after
payment of all debts and liabilities of Tyson. Such holders do not have
preemptive, conversion or redemption rights, except that each holder of Tyson
Class B common stock may, at such holder's option, and upon written notice to
Tyson, convert each share of Tyson Class B common stock into one (1) fully paid
and nonassessable share of Tyson Class A common stock.
Article Fourth of Tyson's certificate of incorporation provides that the
holders of the outstanding shares of Tyson Class B common stock may waive or
suspend (i) certain of their rights to convert their shares of Tyson Class B
common stock into shares of Tyson Class A common stock as provided in such
stock certificates and (ii) Tyson's obligation imposed by a covenant contained
in such Article to reserve and keep available for issuance shares of Tyson
Class A common stock sufficient to provide for any such conversion.
83
COMPARATIVE RIGHTS OF IBP STOCKHOLDERS AND TYSON STOCKHOLDERS
Each of Tyson and IBP is incorporated under the laws of the State of
Delaware. IBP stockholders whose rights are currently governed by the General
Corporation Law of the State of Delaware, the articles of incorporation of IBP
and the bylaws of IBP and whose shares are converted into shares of Tyson Class
A common stock in the merger, will, upon completion of the merger, become
stockholders of Tyson, and their rights as such will be governed by the General
Corporation Law of the State of Delaware, the Tyson certificate of
incorporation and the bylaws of Tyson. The material differences between the
rights of holders of IBP common stock and the rights of holders of Tyson Class
A common stock, resulting from the differences in their governing documents,
are summarized below.
The following summary does not purport to be a complete statement of the
rights of holders of Tyson Class A common stock under the applicable provisions
of the General Corporation Law of the State of Delaware, the Tyson certificate
of incorporation and the Tyson bylaws or the rights of the holders of IBP
common stock under the applicable provisions of the General Corporation Law of
the State of Delaware, the IBP articles of incorporation and the IBP bylaws, or
a complete description of the specific provisions referred to herein. This
summary contains a list of the material differences but is not meant to be
relied upon as an exhaustive list or a detailed description of the provisions
discussed and is qualified in its entirety by reference to the General
Corporation Law of the State of Delaware and the governing corporate
instruments of Tyson and IBP, to which the holders of IBP common stock are
referred. Copies of the governing corporate instruments of Tyson and IBP are
available, without charge, to any person, including any beneficial owner to
whom this proxy statement/prospectus is delivered, by following the
instructions listed under "Where You Can Find More Information."
SUMMARY OF MATERIAL DIFFERENCES BETWEEN
THE RIGHTS OF IBP STOCKHOLDERS AND
THE RIGHTS OF TYSON CLASS A COMMON STOCK STOCKHOLDERS
TYSON CLASS A COMMON STOCK
IBP STOCKHOLDER RIGHTS STOCKHOLDER RIGHTS
------------------------------------ ------------------------------------
AUTHORIZED CAPITAL STOCK: The authorized capital stock of The authorized capital stock of
IBP is (i) 200,000,000 shares of Tyson is (i) 900,000,000 shares of
common stock, par value of $0.05 Tyson Class A common stock, par
per share, and (ii) 25,000,000 value $0.10 per share, and
shares of preferred stock, par value (ii) 900,000,000 shares of Tyson
$1.00 per share. Class B common stock, par value
$0.10 per share.
VOTING RIGHTS: Each share of IBP common Each share of Tyson Class A
stock is entitled to one vote common stock is entitled to one
per share. vote per share. Each share of Tyson
Class B common stock is entitled to
ten votes per share. Holders of
Tyson Class A common stock and
Tyson Class B common stock vote
together as a single class.
NUMBER OF DIRECTORS: The IBP Board currently The Tyson board of directors
consists of 9 directors. currently consists of 12 directors.
DIRECTOR NOMINATIONS: A stockholder wishing to nominate A stockholder wishing to nominate
a person to serve as a director must a person to serve as a director must
submit the nomination between 60 submit the name of the candidate to
and 90 days prior to theanniversary the Tyson board of directors on or
date of the immediately preceding before September 30 of any year.
annual meeting of
stockholders.
84
TYSON CLASS A COMMON STOCK
IBP STOCKHOLDER RIGHTS STOCKHOLDER RIGHTS
------------------------------------- --------------------------------------
CALL OF SPECIAL MEETINGS: Special meetings may be Special meetings may be called by
called only by the Chairman the Senior Chairman of the Tyson
of the IBP Board or by a board of directors, the Chairman,
majority of the whole IBP the Chief Executive Officer, the
Board. President, a majority of the whole
Tyson board of directors or by
stockholders owning a majority of
the stock entitled to vote.
AMENDMENT OF CHARTER: The certificate of incorporation The certificate of incorporation may
may be amended by approval of be amended by approval of the
the IBP Board and the affirmative Tyson board of directors and the
vote of voting stock representing a affirmative vote of voting stock,
majority of votes entitled to be cast voting together as a single class,
on the amendment. representing a majority of votes
entitled to be cast on the
amendment.
The holders of each class of Tyson
common stock are entitled to vote
as a class on the approval of any
amendment which would
(i) increase or decrease the
aggregate number of authorized
shares of the class; (ii) increase or
decrease the par value of the shares
of the class; or (iii) alter or change
the powers, preferences or rights of
such class so as to affect them
adversely.
85
LEGAL MATTERS
The legality of the Tyson Class A common stock exchanged in the merger will
be passed upon for Tyson by R. Read Hudson, Secretary and Corporate Counsel of
Tyson. Mr. Hudson beneficially owns or has rights to acquire an aggregate of
less than 0.01% of Tyson's Class A common stock.
IBP STOCKHOLDER LITIGATION.
DELAWARE STOCKHOLDER LITIGATION. Between October 2 and November 1, 2000,
fourteen actions were filed in the Delaware Court of Chancery entitled: BARUCH
MAPPA V. RICHARD L. BOND ET AL., Civil Action No. 18373-NC; MICHAEL TARAGIN V.
RICHARD L. BOND ET AL., Civil Action No. 18374-NC; DAVID SHAEV V. RAWHIDE
ACQUISITION CORPORATION ET AL., Civil Action No. 18375-NC; CHARLES MILLER V.
RICHARD L. BOND ET AL., Civil Action No. 18376-NC; OLGA FRIED V. RICHARD L.
BOND ET AL., Civil Action No. 18377-NC; PETER ROBBINS V. IBP, INC. ET AL.,
Civil Action No. 18382-NC; JERRY KRIM AND JEFFREY KASSOWAY V. IBP, INC., ET
AL., Civil Action No. 18383-NC; HARRIET RAND V. RICHARD L. BOND ET AL., Civil
Action No. 18385-NC; ALBERT OMINSKY V. RICHARD L. BOND ET AL., Civil Action No.
18386-NC; C. OLIVER BURT V. RICHARD L. BOND ET AL., Civil Action No. 18393-NC;
ERIC MEYER V. RICHARD L. BOND ET AL., Civil Action No. 18399-NC; LOUISE E.
MURRAY V. RAWHIDE ACQUISITION CORPORATION ET AL., Civil Action No. 18411-NC;
MARVIN MASEL V. RICHARD L. BOND ET AL., Civil Action No. 18413-NC; and ROCCO
LANDESMAN V. IBP, INC. ET AL., Civil Action No. 18474-NC alleging that the
terms of the Rawhide merger agreement were unfair to IBP's stockholders. On
November 13, 2000, the Delaware Chancery Court entered an order directing the
consolidation of these actions into a single action, designated as IN RE IBP,
INC. SHAREHOLDERS LITIGATION, C.A. No. 18373 (referred to in this section of
the proxy statement/prospectus as the "Delaware Action"). On December 5, 2000,
the Delaware Chancery Court issued an order designating the Landesman complaint
as the operative complaint. On or about January 8, 2001, plaintiffs in the
Delaware Action filed a consolidated amended complaint which added Tyson and
Purchaser as defendants and alleged on behalf of the class of IBP 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 directors with the
complicity of Tyson. In addition, plaintiffs alleged a derivative claim on
behalf of IBP in which they asserted that IBP's directors wrongfully agreed to
the Rawhide merger agreement and the termination fee and expense reimbursement
provisions therein. On February 21, 2001, all defendants moved to dismiss the
consolidated and amended complaint for failure to state a claim upon which
relief may be granted and for failure to comply with the demand requirements
for derivative claims under Delaware law. On April 27, 2001, plaintiff
stockholders of IBP filed their second consolidated and amended complaint
seeking a declaratory judgment that Tyson had failed to perform its obligations
to plaintiffs by failing to consummate its cash tender offer for IBP common
stock at $30 per share on or before February 28, 2001, specific performance of
Tyson's obligations in connection with such cash tender offer, and damages on
behalf of IBP and against the members of IBP's Board for obligating IBP to pay
the termination fee pursuant to the Rawhide merger agreement.
On June 27, 2001, the parties to the Delaware Action, including the
plaintiffs in such action, entered into a stipulation of settlement, subject to
approval by the Delaware Chancery Court (referred to in this section of the
proxy statement/prospectus as the "Settlement Order"), which provided that:
. Tyson agreed to proceed with the performance of its obligations under
the merger agreement, as revised by the stipulation, including making
the tender 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;
. IBP agreed to obtain from JPMorgan 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;
. Tyson and IBP 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 Delaware Action would be dismissed and
plaintiffs' derivative claims on behalf of IBP against all defendants as
asserted in the Delaware Action would be dismissed; and
86
. all claims that were or could have been asserted in the Delaware Action
would be extinguished.
On August 3, 2001, the Delaware Chancery Court held a hearing to determine
whether the Settlement Order should be approved. After the conclusion of the
hearing, the Delaware Chancery 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 Delaware
Chancery Court also awarded the plaintiffs' attorneys an award of fees and
expenses of $338,000, to be paid by Tyson and IBP.
OTHER STOCKHOLDER LITIGATION. 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., Civ.
No. 00-4211. This complaint names as defendants IBP, each of IBP's 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 alleges 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 merger 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 merger agreement.
The Teamsters complaint requests preliminary and permanent injunctive relief
against consummation of the Rawhide merger, rescission of the Rawhide merger in
the event it is 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 Delaware
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 merger agreement. The Teamsters voluntarily
dismissed their action without prejudice in April 2001.
On January 11, 2001, a second stockholder lawsuit was commenced in the South
Dakota federal district court entitled REIER V. BOND, ET AL., Civ. No. 01-4010.
Purporting to sue derivatively on behalf of IBP, the plaintiff has asserted
claims against IBP's directors under the federal securities laws and state
common law. Plaintiff alleges that defendants caused IBP to file a false and
misleading Schedule 14D-9 in response to the tender offer in violation of
Section 14(e) of the Exchange Act by, among other things, (i) failing to
disclose facts relating to the commercial relationship between JPMorgan and
Tyson, (ii) representing that defendants had determined that the tender offer,
the exchange offer and the 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 alleges that IBP's directors breached their fiduciary duties by failing
to maximize stockholder value in that they agreed to the termination fee
provisions of the Rawhide merger agreement on October 1, 2000 and accepted
Tyson's bid on January 1, 2001 even though it offered consideration
"substantially below the consideration being offered by another bidder." The
complaint seeks: (a) declarations that IBP's Schedule 14D-9 violated the
federal securities laws and that the Rawhide merger agreement and Tyson 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 expert's fees.
On January 30, 2001, defendants moved to stay this action pending resolution of
the Delaware 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
87
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.
TYSON/IBP LITIGATION.
On March 29, 2001, Tyson and Purchaser 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 (referred to in this section of the proxy
statement/prospectus as the "Arkansas Action"). Tyson and Purchaser alleged
that IBP had fraudulently induced them to enter into the merger agreement by
providing materially false financial information and concealing the existence
and content of an SEC comment letter dated December 29, 2000 pertaining to
IBP's past SEC filings. Tyson and Purchaser amended their complaint on April 5,
2000 and April 10, 2000 to add additional claims for breach of 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 against Tyson and Purchaser in the Delaware Action. IBP
sought 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. 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
Chancery Court issued a temporary restraining order restraining Tyson and
Purchaser from prosecuting the Arkansas Action. On April 23, 2001, Tyson filed
counterclaims in the Delaware Action against IBP, alleging that IBP induced
Tyson, by fraud, to execute the December 4, 2001 confidentiality agreement
between IBP and Tyson, the merger agreement and other related agreements and
that IBP had breached various representations and warranties in the merger
agreement, including, without limitation, Sections 5.07(b), 5.08, 5.10(a),
5.11, 5.12, 5.16 and 5.19 thereof. Tyson sought rescission, declaratory relief
and damages, including recovery of the $66.5 million advanced by Tyson to IBP
to defray the cost of the termination fee and expenses owed by IBP pursuant to
the Rawhide merger agreement. On May 3, 2001, Tyson filed amended counterclaims
against IBP in the Delaware Action to add claims of negligent
misrepresentation, material misrepresentation and mistake. At a hearing on May
10, 2001, the Delaware Chancery Court denied Tyson's motion for partial summary
judgment on its claim for breach of representation and warranty and dismissed
without prejudice IBP's claim for breach of the confidentiality agreement. The
Delaware Chancery Court also issued a preliminary injunction prohibiting Tyson
from litigating its claims in any forum other than the Delaware Chancery Court.
A trial was conducted in the Delaware Chancery Court on May 14, 15, 16, 17, 18,
21, 22, 24 and 25. By agreement of the parties, the Delaware Chancery Court
tried all liability issues raised by the parties on an expedited basis, but
limited its consideration of remedies to specific performance. The Delaware
Chancery Court issued its Memorandum Opinion on June 15, 2001, and revised its
Opinion on June 18, 2001. The Delaware Chancery Court concluded, among other
things, that: (a) the merger agreement, the confidentiality agreement and all
related agreements are valid and enforceable contracts as against Tyson and
were not induced by fraud, negligent misrepresentation, material
misrepresentation or mistake; (b) Tyson breached its obligations to IBP under
the merger agreement when it terminated the merger agreement on March 29, 2001
and IBP did not breach any of its representations or warranties or any of its
obligations to Tyson under the merger agreement; (c) Tyson did not breach its
obligations to IBP under the merger agreement, or any obligations to the
plaintiff stockholders under the tender offer, by failing to consummate the
tender offer on or before February 28, 2001; and (d) IBP was entitled to
judgment against Tyson on its claim for specific performance of the merger
agreement. On June 27, 2001, the Delaware Chancery Court issued an Order,
Judgment and Decree in accordance with the Opinion. The court also signed the
88
stipulation negotiated by the parties. The stipulation requires Tyson to
consummate the transactions contemplated by the merger agreement, as modified
by the stipulation. See "The Merger Agreement, Stipulation and Voting
Agreement--The Stipulation". The stipulation provides that if the tender 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 Chancery Court for an appropriate remedy
including, but not limited to, specific performance of such transactions,
specific performance of the cash election merger described above under "The
Merger Agreement, Stipulation and Voting Agreement--The Merger Agreement--The
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
Chancery Court determined to be Tyson's breach, and Tyson will be entitled to
opposed such motion on any appropriate grounds. The stipulation further
provides that nothing other than Tyson's consummation of the tender 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 Chancery Court retains exclusive
jurisdiction over the Delaware 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 Chancery Court'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
Chancery Court determines that Tyson is not required to consummate the tender
offer or IBP moves for an award of interest, an adjustment to the financial
terms of the consideration to be paid to IBP stockholders and/or damages on
account of what such Court has determined to be Tyson's breach. Pursuant to its
agreement with IBP, on August 10, 2001, Tyson dismissed its complaint in the
Arkansas Action with prejudice.
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 Chancery Court determines that
Tyson is not required to consummate the tender offer or IBP moves for an award
of interest, an adjustment to the financial terms of the consideration to be
paid to IBP stockholders and/or damages on account of what the Delaware
Chancery Court has determined to be Tyson's breach of the merger agreement.
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
Chancery Court. 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 intends to vigorously defend
these claims. On July 17, 2001, Tyson filed a motion to dismiss the complaint.
IBP STOCKHOLDER SECURITIES LITIGATION AGAINST TYSON.
Since June 22, 2001, eight purported class action lawsuits have been
commenced in the United States District Court for the District of Delaware
against Tyson, Don Tyson, John Tyson and Les Baledge seeking monetary damages
on behalf of certain former IBP stockholders and persons who traded in IBP
options. These actions 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 or traded in certain IBP options during the period from March 29, 2001
through June 15, 2001, were harmed. Certain of the plaintiffs in these actions
have moved to consolidate the actions and have asked to be appointed lead
plaintiffs, and their counsel to be appointed lead counsel, to control the
litigation on behalf of the purported class. Tyson intends to vigorously defend
these claims.
89
EXPERTS
The consolidated financial statements of Tyson at September 30, 2000 and
October 2, 1999, and for each of the three years in the period ended September
30, 2000, included in the Proxy Statement of IBP, which is referred to and made
a part of this proxy statement/prospectus, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report incorporated by
reference in Tyson's Annual Report on Form 10-K for the fiscal year ended
September 30, 2000, and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements incorporated in this proxy
statement/prospectus by reference to the Annual Report on Form 10-K of IBP for
the year ended December 30, 2000 have been so incorporated in reliance on the
report (which contains an explanatory paragraph relating to the restatement of
IBP's 1999 and 1998 financial statements) of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
IBP and Tyson file annual, quarterly and current reports, proxy statements,
and other information with the SEC. Anything IBP and Tyson file may be read and
copied at the following locations at the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
Room 1024, Judiciary Plaza Suite 1300 Citicorp Center
450 Fifth Street, N.W. 7 World Trade Center Suite 1400
Washington, DC 20549 New York, New York 10048 500 West Madison Street
Chicago, Illinois 60661-2511
Please call the SEC at 1-800-732-0330 for further information on the public
reference rooms. Our SEC filings should also be available to the public from
commercial document retrieval services and at the Internet world wide web site
that the SEC maintains at HTTP://WWW.SEC.GOV. In addition, materials and
information concerning IBP and Tyson can be inspected at the New York Stock
Exchange, 20 Broad Street, 7th Floor, New York, New York 10005, where IBP
shares and Tyson shares are listed.
The SEC allows us to "incorporate by reference" information into this
document, which means that IBP and Tyson 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 document,
except for any information superseded by information contained directly in, or
incorporated by reference in, this document. This document incorporates by
reference the documents set forth below that were previously filed with the SEC
by IBP (SEC File No. 1-6085), or Tyson (SEC File No. 0-3400). These documents
contain important information about IBP and Tyson.
REGARDING IBP
IBP SEC FILINGS PERIOD
--------------- ------
Annual Report on Form 10-K............................ Fiscal year ended December 30, 2000
Quarterly Reports on Form 10-Q........................ Fiscal quarters ended March 31, 2001 and June 30,
2001
The description of IBP common stock set forth in IBP's
registration statement on Form S-1 (File No. 033-
16620), including any amendment or report filed for
purposes of updating such description............... Filed on August 19, 1987
Current Report on Form 8-K/A.......................... Filed on March 13, 2001
Current Report on Form 8-K............................ Filed on March 13, 2001
Current Report on Form 8-K/A.......................... Filed on March 14, 2001
Current Report on Form 8-K............................ Filed on March 20, 2001
Current Report on Form 8-K/A.......................... Filed on March 20, 2001
Current Report on Form 8-K............................ Filed on August 17, 2001
Proxy for IBP Annual Meeting of Stockholders.......... Filed on April 26, 2001
90
REGARDING TYSON
TYSON SEC FILINGS PERIOD
----------------- ------
Annual Report on Form 10-K............. Fiscal year ended September 30, 2000
Quarterly Reports on Form 10-Q......... Fiscal quarters ended December 30,
2000, March 31,2001 and June 30, 2001
The description of Tyson Class A common
stock and Class B common stock set
forth in Tyson's registration
statement filed by Tyson pursuant to
Section 12 of the Exchange Act,
including any amendment or report
filed for purposes of updating such
description.......................... Filed on January 30, 1969
Current Report on Form 8-K............. Filed on June 19, 2001
Current Report on Form 8-K............. Filed on August 17, 2001
Proxy for Tyson Annual Meeting of
Stockholders......................... Filed on December 8, 2000
The SEC may require IBP and Tyson to file other documents pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act between the time this
document is sent and the date the merger is completed. These other documents
will be deemed to be incorporated by reference in this document and to be a
part of it from the date they are filed with the SEC.
IBP may have already sent you some of the documents incorporated by
reference. Nevertheless, you may obtain any of them through IBP and Tyson, the
SEC, or the SEC's Internet world wide web site as previously described.
Documents incorporated by reference are available from IBP and Tyson without
charge, excluding all exhibits unless IBP and Tyson have specifically
incorporated by reference an exhibit in this document. You may obtain documents
incorporated by reference in this document by requesting them in writing or by
telephone from the appropriate company at the following addresses:
TYSON IBP
Director of Investor Relations Investor Relations Department, IBP, inc.
Tyson Foods, Inc. 800 Stevens Port Drive
2210 West Oaklawn Drive Dakota Dunes, South Dakota 57049
Springdale, Arkansas 72762-6999 Email: investor.relations@ibpinc.com
Email: tysonir@tyson.com (605) 235-2061
(501) 290-4000
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM TYSON OR IBP, PLEASE DO SO BY
SEPTEMBER 21, 2001, IN ORDER TO RECEIVE THEM BEFORE THE SPECIAL MEETING. If you
request any incorporated documents from Tyson or IBP, they will be mailed to
you by first class mail, or another equally prompt means, within one business
day after your request is received.
IBP has provided all information contained in or incorporated by reference
in this document with respect to IBP. Tyson has provided all information
contained in or incorporated by reference in this document with respect to
Tyson and all the combined pro forma financial information of Tyson and IBP.
Neither Tyson nor IBP assumes any responsibility for the accuracy or
completeness of the information provided by the other party.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS DOCUMENT TO VOTE ON THE MERGER AGREEMENT. IBP AND TYSON HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS DOCUMENT. THIS DOCUMENT IS DATED AUGUST 28, 2001. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS DOCUMENT IS ACCURATE
AS OF ANY DATE OTHER THAN SUCH DATE. NEITHER THE MAILING OF THIS DOCUMENT TO
STOCKHOLDERS NOR THE COMPLETION OF THE MERGER WILL CREATE ANY IMPLICATION TO
THE CONTRARY.
91
APPENDIX A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JANUARY 1, 2001
AMONG
IBP, INC.,
TYSON FOODS, INC.
AND
LASSO ACQUISITION CORPORATION
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS........................................ A-2
Section 1.01. Definitions................................ A-2
ARTICLE 2 THE OFFER AND THE EXCHANGE OFFER................... A-4
Section 2.01. The Offer.................................. A-4
Section 2.02. Company Actions............................ A-7
Section 2.03. Company Board Representation; Section 14(f) A-8
Section 2.04. Adjustment of the Exchange Offer Ratio..... A-9
ARTICLE 3 THE MERGER......................................... A-9
Section 3.01. The Merger................................. A-9
Section 3.02. Conversion of Shares....................... A-10
Section 3.03. Surrender and Payment...................... A-10
Section 3.04. Stock Options.............................. A-11
Section 3.05. Withholding Rights......................... A-12
Section 3.06. Terminated Tender Offer.................... A-12
Section 3.07. Adjustment of Exchange Ratio............... A-12
ARTICLE 4 THE SURVIVING CORPORATION.......................... A-12
Section 4.01. Certificate of Incorporation............... A-12
Section 4.02. Bylaws..................................... A-12
Section 4.03. Directors and Officers..................... A-12
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...... A-13
Section 5.01. Corporate Existence and Power.............. A-13
Section 5.02. Corporate Authorization.................... A-13
Section 5.03. Governmental Authorization................. A-13
Section 5.04. Non-Contravention.......................... A-13
Section 5.05. Capitalization............................. A-14
Section 5.06. Subsidiaries............................... A-14
Section 5.07. SEC Filings................................ A-14
Section 5.08. Financial Statements....................... A-15
Section 5.09. Disclosure Documents....................... A-15
Section 5.10. Absence of Certain Changes................. A-16
Section 5.11. No Undisclosed Material Liabilities........ A-17
Section 5.12. Litigation................................. A-17
Section 5.13. Taxes...................................... A-17
Section 5.14. ERISA...................................... A-18
Section 5.15. Labor Matters.............................. A-20
Section 5.16. Compliance with Laws....................... A-20
Section 5.17. Licenses and Permits....................... A-20
Section 5.18. Intellectual Property...................... A-21
Section 5.19. Environmental Matters...................... A-21
Section 5.20. Finders' Fees.............................. A-22
Section 5.21. Inapplicability of Certain Restrictions.... A-22
Section 5.22. Rights Plan................................ A-22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT........... A-22
Section 6.01. Corporate Existence and Power.............. A-22
Section 6.02. Corporate Authorization.................... A-22
Section 6.03. Governmental Authorization................. A-23
A-i
PAGE
----
Section 6.04. Non-Contravention.......................... A-23
Section 6.05. Capitalization............................. A-23
Section 6.06. Parent Subsidiaries........................ A-23
Section 6.07. SEC Filings................................ A-24
Section 6.08. Parent Financial Statements................ A-24
Section 6.09. Disclosure Documents....................... A-24
Section 6.10. Absence of Certain Changes................. A-25
Section 6.11. No Undisclosed Material Liabilities........ A-26
Section 6.12. Adequate Funds............................. A-26
Section 6.13... Ownership of Company Common Stock.......... A-26
Section 6.14. Finders' Fees.............................. A-26
Section 6.15. Compliance of Laws......................... A-26
ARTICLE 7 COVENANTS OF THE COMPANY............................ A-26
Section 7.01. Conduct of the Company..................... A-26
Section 7.02. Stockholder Meeting........................ A-28
Section 7.03. Access to Information...................... A-28
Section 7.04. Other Offers............................... A-28
Section 7.05. Notices of Certain Events.................. A-30
Section 7.06. Tax Matters................................ A-30
Section 7.07. Affiliates................................. A-30
Section 7.08. Confidentiality............................ A-31
Section 7.09. Other Actions.............................. A-31
ARTICLE 8 COVENANTS OF PARENT................................. A-31
Section 8.01. Parent Stockholder Meeting................. A-31
Section 8.02. Confidentiality............................ A-31
Section 8.03. Voting of Shares........................... A-31
Section 8.04. Director And Officer Liability............. A-31
Section 8.05. Employee Matters........................... A-31
Section 8.06. Obligations of Merger Co................... A-31
Section 8.07. NYSE Listing............................... A-32
Section 8.08. Acquisitions of Shares..................... A-32
Section 8.09. Notices of Certain Events.................. A-32
Section 8.10. Reorganization Matters..................... A-32
Section 8.11. Information Relating to Offer.............. A-32
Section 8.12. Conduct of Parent.......................... A-32
Section 8.13. Voting Agreement........................... A-32
Section 8.14. Other Actions.............................. A-32
ARTICLE 9 COVENANTS OF PARENT AND THE COMPANY................. A-33
Section 9.01. Company Proxy Statement and Merger Form S-4 A-33
Section 9.02. Certain Regulatory Issues.................. A-33
Section 9.03. Certain Filings............................ A-34
Section 9.04. Public Announcements....................... A-34
Section 9.05. Further Assurances......................... A-34
ARTICLE 10 CONDITIONS TO THE MERGER........................... A-34
Section 10.01. Conditions to the Obligations of Each Party A-34
Section 10.02. Conditions to the Obligation of the Company A-35
A-ii
PAGE
----
ARTICLE 11 TERMINATION........................................ A-35
Section 11.01. Termination................................ A-35
Section 11.02. Effect of Termination...................... A-36
Section 11.03. Parent Payment Event....................... A-36
ARTICLE 12 MISCELLANEOUS...................................... A-36
Section 12.01. Notices.................................... A-36
Section 12.02. Survival of Representations and Warranties. A-37
Section 12.03. Amendments; No Waivers; Direction of Merger A-37
Section 12.04. Expenses................................... A-38
Section 12.05. Successors and Assigns; Benefit............ A-38
Section 12.06. Governing Law.............................. A-38
Section 12.07. Counterparts; Effectiveness................ A-38
Exhibit A Form of Affiliate's Agreement
Exhibit B Form of Voting Agreement
A-iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of January 1, 2001 (the "Agreement")
among IBP, inc., a Delaware corporation (the "Company"), Tyson Foods, Inc., a
Delaware corporation ("Parent"), and Lasso Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Co.").
WITNESSETH:
WHEREAS, (i) on December 12, 2000, Parent and Merger Co. commenced a tender
offer (such offer, including any amendments and changes thereto (including
those contemplated by this Agreement) the "Offer") to acquire 50.1% (the
"Maximum Amount") of the issued and outstanding shares of Common Stock, par
value $0.05 per share, of the Company ("Company Common Stock") for $26.00 per
share (such amount, or any greater amount per share paid pursuant to the Offer,
the "Per Share of Company Common Stock Amount") net to the seller in cash and
(ii) on December 12, 2000 Parent and Merger Co. filed with the Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Form TO (together
with all amendments and supplements thereto, the "Form TO"), promulgated under
the Securities Exchange Act of 1934, as amended (such Act and the rules and
regulations promulgated thereunder being referred to herein as the "Exchange
Act"), which Form TO included an offer to purchase (the "Offer to Purchase");
WHEREAS, on December 22, 2000, the Company filed with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 promulgated under the
Exchange Act (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing the recommendation of the Board of Directors of
the Company;
WHEREAS, Parent and Merger Co. (i) on December 28, 2000, announced that they
were increasing the Per Share of Company Common Stock Amount to $27.00 net to
the seller in cash and (ii) on December 29, 2000 filed with the SEC an
amendment to the Form TO which incorporated into the Offer, among other things,
the Per Share of Company Common Stock Amount of $27.00;
WHEREAS, Parent and Merger Co. propose to increase the Per Share of Company
Common Stock Amount to $30.00 net to the seller in cash on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, it is intended that the Offer, the Exchange Offer (as defined
below) and the Merger (as defined below), taken together, shall qualify as a
reorganization within the meaning of Section 368(a) of the Code (as defined
below) and that this Agreement shall constitute a plan of reorganization for
purposes of the Code;
WHEREAS, the Boards of Directors of Parent, Merger Co. and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders to consummate, and have approved, the business
combination transaction provided for herein including (i) the Offer, (ii) an
offer to exchange (the "Exchange Offer") for each share of Company Common Stock
not tendered in the Offer the number of shares of Class A Common Stock, par
value $0.10 per share, of Parent ("Parent Common Stock") equal to the Exchange
Offer Ratio (as defined in Section 2.01(c)), and (iii) the Merger (as defined
in Section 3.01); and
WHEREAS, Parent and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated by this Agreement and also to prescribe certain conditions to the
consummation of such transactions;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto agree
as follows:
A-1
ARTICLE 1
DEFINITIONS
Section 1.01. DEFINITIONS. Each of the following terms is defined in the
Section set forth opposite such term:
TERM SECTION
---- -------
Acquisition Proposal............. 7.04
Amended Offer to Purchase........ 2.01(a)
Average Exchange Offer Price..... 2.01(c)
Average Parent Common Stock Price 3.02
Balance Sheet.................... 5.08
Balance Sheet Date............... 5.08
Board of Directors............... 2.02(a)
Class B Common Stock............. 6.05
Code............................. 5.14(a)
Company.......................... first paragraph
Company Common Stock............. recitals
Company Disclosure Documents..... 5.09(a)
Company Option................... 3.04(a)
Company Proxy Statement.......... 5.09(a)
Company Securities............... 5.05
Company Stockholder Meeting...... 7.02
Company 10-K..................... 5.07(a)
Company 10-Qs.................... 5.07(a)
Confidentiality Agreements....... 7.08
Control Date..................... 2.03
Delaware Law..................... 2.02(a)
Effective Time................... 3.01(b)
Employee Plans................... 5.14(a)
Environmental Laws............... 5.19(d)
Environmental Permits............ 5.19(d)
ERISA............................ 5.14(a)
ERISA Affiliate.................. 5.14(a)
Exchange Act..................... recitals
Exchange Agent................... 3.03(a)
Exchange Form S-4................ 2.01(b)
Exchange Form TO................. 2.01(b)
Exchange Offer................... recitals
Exchange Offer Documents......... 2.01(b)
Exchange Offer Ratio............. 2.01(c)
Exchange Ratio................... 3.02(c)
Exchange Schedule 14D-9.......... 2.02(c)
Failed Tender Offer.............. 3.06
Final Expiration Date............ 2.01(d)
Form TO.......................... recitals
Form TO/A........................ 2.01(a)
Hazardous Substances............. 5.19
HSR Act.......................... 5.03
Independent Directors............ 2.03(c)
Intellectual Property Right...... 5.18
International Plan............... 5.14(i)
Lien............................. 5.04
A-2
TERM SECTION
---- -------
Material Adverse Effect................. 5.01
Maximum Amount.......................... recitals
Merger.................................. 3.01(a)
Merger Co............................... first paragraph
Merger Consideration.................... 3.02(c)
Merger Form S-4......................... 9.01
Minimum Condition....................... 2.01(a)
Multiemployer Plan...................... 5.14(b)
NYSE.................................... 3.02
Offer................................... recitals
Offer Documents......................... 2.01(a)
Offer to Exchange....................... 2.01(b)
Offer to Purchase....................... recitals
Parent.................................. first paragraph
Parent Balance Sheet.................... 6.08
Parent Balance Sheet Date............... 6.08
Parent Common Stock..................... recitals
Parent Disclosure Documents............. 6.09(a)
Parent Material Adverse Effect.......... 6.01
Parent Option........................... 3.04(a)
Parent Payment Event.................... 11.03(b)
Parent Securities....................... 6.05
Parent Stockholder Meeting.............. 8.01
Parent Subsidiary....................... 6.06(a)
Parent Subsidiary Securities............ 6.06(b)
Parent 10-K............................. 6.07
Payment Date............................ 2.01(a)
Payment Event........................... 7.04(b)
Permits................................. 5.17
Per Share of Company Common Stock Amount recitals
Person.................................. 3.03(c) and 7.04(a)
Pre-Closing Tax Period.................. 5.13(a)
Preferred Stock......................... 5.05
Preliminary Prospectus.................. 2.01(b)
Rawhide Merger Agreement................ 2.02(a)
Reimbursement Payment................... 7.04(b)
Representatives......................... 7.03
Returns................................. 5.13(a)
Schedule 14D-9.......................... recitals
Schedule 14D-9/A........................ 2.02(b)
SEC..................................... recitals
Securities Act.......................... 5.07(c)
Special Committee....................... 2.02(a)
Straddle Period......................... 5.13(a)
Stockholders............................ recitals
Subsidiary.............................. 5.06(a)
Subsidiary Securities................... 5.06(b)
Superior Proposal....................... 7.04
Surviving Corporation................... 3.01(a)
Tax..................................... 5.13(b)
Tax Asset............................... 5.13(a)
368(a) Reorganization................... 7.06(c)
Title IV Plan........................... 5.14(b)
A-3
ARTICLE 2
THE OFFER AND THE EXCHANGE OFFER
Section 2.01. THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 11.01 and none of the events set
forth in Annex I hereto shall have occurred and be continuing, as promptly as
practicable, but in no event later than three business days, after the date
hereof, Parent shall cause Merger Co. to, and Merger Co. shall, file with the
SEC, to the extent required by the Exchange Act, an amended Form TO (the "Form
TO/A"), an amended Offer to Purchase (the "Amended Offer to Purchase") and, if
necessary, the related letter of transmittal and any related summary
advertisement (the Form TO/A, the Amended Offer to Purchase and such other
documents, together with all amendments and supplements thereto, the "Offer
Documents") to reflect, among other things, an increase in the per share price
to be paid in the Offer to $30.00 and, if necessary, an extension of the
currently scheduled expiration date to allow the Offer to remain open for ten
business days from the date of such increase. The obligation of Merger Co. to
consummate the Offer and to accept for payment and to pay for shares of Company
Common Stock tendered pursuant to the Offer shall be subject only to (i) the
condition that there shall be validly tendered in accordance with the terms of
the Offer, prior to the expiration date of the Offer and not withdrawn, a
number of shares that, together with the shares of Company Common Stock then
owned by Parent and/or Merger Co., represents 50.1% of the shares of Company
Common Stock outstanding (the "Minimum Condition") and (ii) the other
conditions set forth in Annex I hereto. Merger Co. expressly reserves the right
to waive any such condition (other than the Minimum Condition, which shall not
be waived without the prior written consent of the Company) or the condition
relating to the expiration of the HSR Act and to increase the Per Share of
Company Common Stock Amount. Notwithstanding the foregoing, no change may be
made which (i) decreases the Per Share of Company Common Stock Amount, (ii)
changes the form of consideration to be paid in the Offer, (iii) increases the
Maximum Amount or the Minimum Condition, (iv) reduces the number of shares of
Company Common Stock sought to be purchased in the Offer, (v) imposes
conditions to the Offer in addition to those set forth in Annex I hereto, (vi)
except as specifically provided for in this Section 2.01(a), extends the
expiration date of the Offer or (vii) otherwise alters or amends any term of
the Offer in any manner adverse to the holders of shares of Company Common
Stock; PROVIDED, HOWEVER, that the Offer may be extended for any period to the
extent required by law or by any rule, regulation, interpretation or position
of the SEC or the staff thereof applicable to the Offer. Parent and Merger Co.
shall comply with the obligations respecting prompt payment and announcement
under the Exchange Act, and, without limiting the generality of the foregoing,
subject to the terms and conditions of this Agreement, including but not
limited to the conditions of the Offer, Merger Co. shall and Parent shall cause
Merger Co. to, accept for payment and pay for shares of Company Common Stock
tendered pursuant to the Offer as soon as practicable after expiration thereof.
Unless this Agreement has been terminated pursuant to Section 11.01 and subject
to Section 2.01(d), Merger Co. shall extend the Offer from time to time in the
event that, at a then-scheduled expiration date, all of the conditions to the
Offer have not been satisfied or waived as permitted pursuant to this
Agreement, each such extension not to exceed (unless otherwise consented to in
writing by the Company) the lesser of 10 additional business days or such fewer
number of days that Merger Co. reasonably believes are necessary to cause the
conditions to the Offer to be satisfied. Except as provided in Section 2.01(d)
or 2.01(f), Merger Co. shall not terminate the Offer without purchasing shares
of Company Common Stock pursuant to the Offer. If at the expiration of the
Offer a number of shares of Company Common Stock has been validly tendered and
not withdrawn that, together with the shares of Company Common Stock then owned
by Parent and/or Merger Co., exceeds the Maximum Amount, the number of shares
of Company Common Stock to be purchased by Merger Co. pursuant to the Offer
shall be prorated in accordance with Rule 14d-8 promulgated under the Exchange
Act, so that the number of shares of Company Common Stock purchased by Merger
Co. pursuant to the Offer, together with the shares of Company Common Stock
then owned by Parent and Merger Co., will represent 50.1% of the shares of
Company Common Stock outstanding.
(b) Provided that this Agreement shall not have been terminated in
accordance with Section 11.01 and none of the events set forth in Annex II
hereto shall have occurred and be continuing, as promptly as practicable after
the date hereof, Parent shall cause Merger Co. to, and Merger Co. shall (i)
commence the Exchange Offer
A-4
pursuant to which Merger Co. shall offer to issue a number of duly authorized,
validly issued, fully paid and non-assessable shares of Parent Common Stock
equal to the Exchange Offer Ratio (as defined below) for each then issued and
outstanding share of Company Common Stock (other than shares of Company Common
Stock then owned by Parent or Merger Co.), (ii) file with the SEC, to the
extent required by the Exchange Act, a Form TO (the "Exchange Form TO"), an
Offer to Exchange (the "Offer to Exchange") and the related letter of
transmittal and any related summary advertisement (the Exchange Form TO, the
Offer to Exchange and such other documents, together with all amendments and
supplements thereto, the "Exchange Offer Documents") and (iii) file with the
SEC a Registration Statement on Form S-4 (the "Exchange Form S-4") to register
under the Securities Act the securities to be issued in the Exchange Offer. The
obligation of Merger Co. to consummate the Exchange Offer and to issue shares
of Parent Common Stock in exchange for shares of Company Common Stock tendered
pursuant to the Exchange Offer shall be subject only to the conditions set
forth in Annex II hereto. Merger Co. expressly reserves the right to waive any
such condition (other than the condition that at least five business days have
elapsed since the acceptance for payment and payment for a number of shares of
Company Common Stock pursuant to the Offer representing, together with shares
of Company Common Stock previously owned by Parent, at least 50.1% of the
issued and outstanding shares of Company Common Stock and the subsequent
delivery of shares of Company Common Stock not purchased in the Offer to the
Depositary under the Exchange Offer, which condition shall not be waived
without the prior written consent of the Company) and to increase the Exchange
Offer Ratio. Notwithstanding the foregoing, no change may be made which (i)
decreases, or would have the effect of decreasing, the Exchange Offer Ratio,
(ii) changes the form of consideration to be paid in the Exchange Offer, (iii)
reduces the number of shares of Company Common Stock sought to be purchased in
the Exchange Offer, (iv) imposes conditions to the Exchange Offer in addition
to those set forth in Annex II hereto, (v) extends the expiration date of the
Exchange Offer or (vi) otherwise alters or amends any term of the Exchange
Offer in any manner adverse to the holders of shares of Company Common Stock;
PROVIDED, HOWEVER, that the Exchange Offer may be extended (x) for any period
to the extent required by law or by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the Exchange Offer or
(y) if the number of shares of Company Common Stock validly tendered in
accordance with the Exchange Offer, together with shares of Company Common
Stock owned by Parent as of such date, is less than 90% of the outstanding
shares of Company Common Stock, as of the scheduled or extended expiration
date. Parent and Merger Co. shall comply with the obligations respecting prompt
delivery of shares of Parent Common Stock and announcement under the Exchange
Act, and, without limiting the generality of the foregoing, subject to the
terms and conditions of this Agreement, including but not limited to the
conditions of the Exchange Offer, Merger Co. shall and Parent shall cause
Merger Co. to, accept for exchange and issue shares of Parent Common Stock in
exchange for shares of Company Common Stock tendered pursuant to the Exchange
Offer as soon as practicable after expiration thereof. Unless this Agreement
has been terminated pursuant to Section 11.01 and subject to Section 2.01(d),
Merger Co. shall extend the Exchange Offer from time to time in the event that,
at a then- scheduled expiration date, all of the conditions to the Exchange
Offer have not been satisfied or waived as permitted pursuant to this
Agreement, each such extension not to exceed (unless otherwise consented to in
writing by the Company) the lesser of 10 additional business days or such fewer
number of days that Merger Co. reasonably believes are necessary to cause the
conditions to the Offer to be satisfied. Except as provided in Section 2.01(d)
or 2.01(f), Merger Co. shall not terminate the Exchange Offer without accepting
shares of Company Common Stock and issuing shares of Parent Common Stock
pursuant to the Exchange Offer. Notwithstanding anything to the contrary set
forth herein, no certificates representing fractional shares of Parent Common
Stock shall be issued in connection with the Exchange Offer, and in lieu
thereof each tendering stockholder who would otherwise be entitled to a
fractional share of Parent Common Stock in the Exchange Offer will be paid an
amount in cash equal to the product obtained by multiplying (A) the fractional
share interest to which such holder would otherwise be entitled by (B) the
Average Exchange Offer Price (as defined below).
(c) For purposes of this Section 2.01, "Exchange Offer Ratio" means the
number of shares of Parent Common Stock determined as set forth below:
(i)If the Average Exchange Offer Price is equal to or greater than $15.40,
the Exchange Ratio shall be 1.948 shares of Parent Common Stock;
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(ii)If the Average Exchange Offer Price is less than $15.40 and greater than
$12.60, the Exchange Ratio shall be determined by dividing $30.00 by the
Average Price; and
(iii)If the Average Exchange Offer Price is equal to or less than $12.60, the
Exchange Ratio shall be 2.381 shares of Parent Common Stock.
For purposes of this Section 2.01, "Average Exchange Offer Price" means the
average of the closing price per share of Parent Common Stock on the New York
Stock Exchange, Inc. (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.
(d) If, on February 28, 2001 (the "Final Expiration Date"), Merger Co. has
not consummated the Offer in accordance with its terms, Merger Co. shall
thereupon terminate the Offer and the Exchange Offer without the acceptance of
any shares of Company Common Stock previously tendered. If, at the Final
Expiration Date, the Minimum Condition has not been satisfied, Merger Co.
shall, unless Parent and the Company otherwise agree, terminate the Offer and
the Exchange Offer, and the parties shall, subject to the terms and conditions
hereof, seek to consummate the Merger.
(e) As soon as practicable following the filing of the Form TO/A with the
SEC, Merger Co. shall take such steps as are reasonably necessary to cause the
Amended Offer to Purchase to be disseminated to the holders of shares of
Company Common Stock as and to the extent required by applicable federal
securities laws. Parent, Merger Co. and the Company shall correct promptly any
information provided by any of them for use in the Offer Documents which shall
have become false or misleading, and Parent and Merger Co. shall take all
reasonable steps necessary to cause the Form TO/A as so corrected to be filed
with the SEC and the other Offer Documents as so corrected to be disseminated
to holders of shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given an opportunity to review and comment on the Offer Documents
prior to their being filed with the SEC, and Parent and Merger Co. will provide
the Company and its counsel in writing with any comments that Parent or Merger
Co. receives from the SEC or its staff with respect to the Offer Documents
promptly after receipt of any such comments.
(f) In the event that this Agreement has been terminated pursuant to Section
11.01, Merger Co. shall, and Parent shall cause Merger Co. to, promptly
terminate the Offer and the Exchange Offer without accepting any shares of
Company Common Stock for payment or exchange.
(g) Parent shall provide or cause to be provided to Merger Co. on a timely
basis the funds and shares of Parent Common Stock necessary to accept for
payment, and pay for, any shares of Company Common Stock that Merger Co.
becomes obligated to accept for payment, and pay for, pursuant to the Offer and
the Exchange Offer.
(h) Parent and Merger Co. shall promptly prepare and file with the SEC the
Exchange Form S-4 to register the offer and sale of shares of Parent Company
Stock in the Exchange Offer. The Exchange Form S-4 will include a preliminary
prospectus containing the information required under Rule 14d-4(b) promulgated
under the Exchange Act (the "Preliminary Prospectus"). As soon as practicable
on the date of commencement of the Exchange Offer, Parent and Merger Co. shall
(i) file with the SEC the Exchange Form TO with respect to the Exchange Offer
which will contain or incorporate by reference all or part of the Preliminary
Prospectus and (ii) cause the Exchange Offer Documents to be disseminated to
holders of shares of Company Common Stock. Parent and Merger Co. agree that
they shall cause the Exchange Form S-4, the Exchange Form TO, the Offer to
Exchange and all amendments or supplements thereto to comply in all material
respects with the Exchange Act, the Securities Act and the rules and
regulations thereunder and other applicable laws. Each of Parent, Merger Co.
and the Company agrees to correct promptly any information provided by it for
use in the Offer Documents if and to the extent that such information shall
have become false or misleading in any material respect, and Parent and Merger
Co. further agree to take all steps necessary to cause the Exchange Offer
Documents as so corrected to be filed with the SEC and the other Exchange Offer
Documents as so corrected to be disseminated to holders
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of Shares, in each case as and to the extent required by applicable federal
securities laws. The Company, Parent and Merger Co. shall cooperate with each
other in the preparation of the Exchange Form S-4, the Exchange Form TO and any
amendment or supplement thereto, and Parent shall notify the Company of the
receipt of any comments of the SEC with respect to the Exchange Form S-4 and
the Exchange Form TO and of any requests by the SEC for any amendment or
supplement thereto or for additional information, and shall provide promptly
copies of all correspondence between Parent or any of its Representatives and
the SEC with respect to the Exchange Form S-4 and the Exchange Form TO. Parent
shall give the Company and its counsel the opportunity to review the Exchange
Form S-4 and the Exchange Form TO and all responses to requests for additional
information by and replies to comments of the SEC before their being filed
with, or sent to, the SEC. Each of Parent and Merger Co. agrees to use its best
efforts, after consultation with the Company, to respond promptly to all such
comments of and requests by the SEC. Each of Parent and Merger Co. shall use
its reasonable best efforts to cause the Exchange Form S-4 to be declared
effective by the SEC as promptly as practicable. Parent shall promptly take any
action (other than qualifying as a foreign corporation or taking any action
which would subject it to service of process in any jurisdiction where Parent
is not now so qualified or subject) required to be taken under foreign or state
securities or Blue Sky laws in connection with the issuance of Parent Common
Stock in the Exchange Offer. Parent will advise Company, promptly after it
receives notice thereof, of (i) the time when the Exchange Form S-4 becomes
effective, (ii) the issuance of any stop order with respect to the Exchange
Form S-4, (iii) the suspension of the qualification of Parent Common Stock for
offering or sale in any jurisdiction, or (iv) any request by the SEC for an
amendment of the Exchange Form S-4 or comments thereon and responses thereto or
requests by the SEC for additional information.
Section 2.02. COMPANY ACTIONS. (a) The Company hereby approves and consents
to the Offer and the Exchange Offer and represents that (i) the Board of
Directors of the Company and acting on the unanimous recommendation of a
special committee of the Board of Directors of the Company comprised of all
members of the Board of Directors other than Messrs. Bond, Chalsty, Leman and
Peterson (the "Special Committee"), at a meeting duly called and held, has
unanimously (A) determined that this Agreement and the transactions
contemplated hereby, including the Offer, the Exchange Offer and the Merger,
taken together, are fair to and in the best interests of the holders of shares
of Company Common Stock, (B) approved this Agreement and the transactions
contemplated hereby, including the Offer, the Exchange Offer and the Merger,
which approval satisfies in full the requirements of Section 203 of the General
Corporation Law of the State of Delaware (the "Delaware Law") with respect to
the transactions contemplated hereby, (C) resolved to recommend that the
stockholders of the Company accept the Offer and the Exchange Offer, tender
their shares of Company Common Stock thereunder to Merger Co. and, if required
by applicable law in order to consummate the Merger, approve and adopt this
Agreement and the transactions contemplated hereby, provided that, subject to
Section 7.04, such recommendation may be withdrawn, modified or amended if such
recommendation would be reasonably likely to be inconsistent with its fiduciary
duties under the applicable law as determined by the Board of Directors of the
Company in good faith after consultation with its legal advisors and (ii) the
Company has provided the applicable notice of termination to Rawhide Holdings
Corporation required by Section 10.01(e) of the Agreement and Plan of Merger,
dated as of October 1, 2000 among the Company, Rawhide Holdings Corporation and
Rawhide Acquisition Corporation ("Rawhide Merger Agreement"). The Company
hereby consents to the inclusion in the Offer Documents and the Exchange Offer
Documents of the recommendation of the Board described in the immediately
preceding sentence. The Company has been advised by each of its directors and
executive officers that they intend either to tender all shares of Company
Common Stock beneficially owned by them to Merger Co. pursuant to the Offer and
the Exchange Offer or to vote such shares of Company Common Stock in favor of
the approval and adoption of the transactions contemplated hereby. The Company
further represents that J.P. Morgan Securities Inc. has delivered to the
Company's Board of Directors its written opinion that the consideration to be
paid in the Offer, the Exchange Offer and the Merger is fair to the holders of
shares of Company Common Stock, from a financial point of view.
(b) On the date the Offer Documents are filed with the SEC in accordance
with Section 2.01(a), the Company shall file with the SEC an amended Schedule
14D-9 (the "Schedule 14D-9/A") containing the recommendation of the Board of
Directors of the Company described in Section 2.02(a)(i), and shall take such
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steps as are reasonably necessary to cause the Schedule 14D-9/A to be
disseminated to the holders of shares of Company Common Stock as and to the
extent required by applicable federal securities laws. The Company, Parent and
Merger Co. shall correct promptly any information provided by any of them for
use in the Schedule 14D-9/A which shall have become false or misleading, and
the Company shall take all reasonable steps necessary to cause the Schedule
14D-9/A as so corrected to be filed with the SEC and disseminated to holders of
shares of Company Common Stock, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given an
opportunity to review and comment on the Schedule 14D-9/A prior to its being
filed with the SEC, and the Company will provide Parent and its counsel in
writing with any comments that the Company receives from the SEC or its staff
with respect to the Schedule 14D-9/A promptly after receipt of any such
comments.
(c) On the date the Exchange Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 promulgated under the Exchange Act (together with all amendments
and supplements thereto, the "Exchange Schedule 14D-9") containing the
recommendation of the Board of Directors of the Company described in Section
2.02(a)(i), and shall take such steps as are necessary to cause the Exchange
Schedule 14D-9 to be disseminated to the holders of shares of Company Common
Stock as and to the extent required by applicable federal securities laws. The
Company, Parent and Merger Co. shall correct promptly any information provided
by any of them for use in the Exchange Schedule 14D-9 which shall have become
false or misleading, and the Company shall take all reasonable steps necessary
to cause the Exchange Schedule 14D-9 as so corrected to be filed with the SEC
and disseminated to holders of shares of Company Common Stock, in each case as
and to the extent required by applicable federal securities laws. Parent and
its counsel shall be given an opportunity to review and comment on the Exchange
Schedule 14D-9 prior to its being filed with the SEC, and the Company will
provide Parent and its counsel in writing with any comments that the Company
receives from the SEC or its staff with respect to the Exchange Schedule 14D-9
promptly after receipt of any such comments.
(d) In connection with the Offer and the Exchange Offer, the Company shall
use its reasonable best efforts to cause its transfer agent to furnish Merger
Co. promptly with mailing labels containing the names and addresses of all
record holders of shares of Company Common Stock and with security position
listings of shares of Company Common Stock held in stock depositories, each as
of a recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders
and beneficial owners of shares of Company Common Stock. The Company shall
furnish Merger Co. with such additional information, including, without
limitation, updated listings and files of stockholders, mailing labels and
security position listings and such other assistance as Parent, Merger Co. or
their Representatives may reasonably request in communicating the Offer and the
Exchange Offer to record and beneficial holders of shares of Company Common
Stock. Subject to the requirements of applicable law, and except for such steps
as are necessary to disseminate the Offer Documents, the Exchange Offer
Documents and any other documents necessary to consummate the Offer, the
Exchange Offer or the Merger, Parent and Merger Co. shall hold in confidence
the information contained in such labels, listings and files, shall use such
information only in connection with the Offer, the Exchange Offer and the
Merger, and, if this Agreement shall be terminated in accordance with Section
11.01, shall deliver to the Company all copies of, and any extracts or
summaries from, such information then in their possession or control.
(e) In connection with the Offer and the Exchange Offer, the Company shall,
and shall use its reasonable best efforts to cause its Representatives to,
cooperate with Parent and Merger Co. in connection with the Offer and the
Exchange Offer, including, without limitation, furnishing Parent with such
information (which will be treated and held in confidence by Parent),
documentation and assistance as Parent or its Representatives may reasonably
request in connection with the Offer and the Exchange Offer.
Section 2.03. COMPANY BOARD REPRESENTATION; SECTION 14(F). (a) Subject to
compliance with Delaware Law, the Company's Certificate of Incorporation and
other applicable law, promptly upon the payment by Merger Co. for shares of
Company Common Stock purchased pursuant to the Offer representing, together
with
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shares of Company Stock previously owned by Parent, at least 50.1% of the
shares of Company Common Stock outstanding, and from time to time thereafter,
the Company shall, upon request of Parent, promptly use its reasonable best
efforts to take all actions necessary to cause a majority of the directors of
the Company to consist of Parent's designees, including by accepting the
resignations of those incumbent directors designated by the Company or
increasing the size of the Board of Directors and causing Parent's designees to
be elected. The date on which Parent's designees constitute at least a majority
of the Company's Board of Directors is herein referred to as the "Control
Date."
(b) The Company's obligations to appoint Parent's designees to the Board of
Directors of the Company shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder, if applicable. The Company shall
promptly take all actions required pursuant to such Section and Rule in order
to fulfill its obligations under this Section, and shall include in the
Schedule 14D-9/A such information with respect to the Company and its officers
and directors as is required under such Section and Rule to fulfill such
obligations. Parent or Merger Co. shall supply to the Company and be solely
responsible for any information with respect to either of them and their
designees, officers, directors and affiliates required by such Section 14(f)
and Rule 14f-1.
(c) Prior to the Effective Time, any amendment of this Agreement or the
Certificate of Incorporation or Bylaws of the Company, any termination of this
Agreement by the Company, any consent given by the Company hereunder, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Merger Co., waiver of any of the
Company's rights hereunder or any other action by the Company in connection
with or relating to the transactions contemplated hereby shall require the
concurrence of a majority of the directors of the Company then in office who
(i) neither were designated by Parent nor are employees of the Company or any
of its Subsidiaries or, if there be just one such director, the concurrence of
such director or (ii) were members of the Special Committee (the "Independent
Directors"). If the number of Independent Directors shall be reduced below two
for any reason whatsoever, the remaining Independent Director shall designate a
person to fill such vacancy who shall be deemed to be an Independent Director
for purposes of this Agreement or, if no Independent Directors then remain, the
other directors shall designate two persons to fill such vacancies who shall
not be officers or affiliates of the Company or any of its Subsidiaries, or
officers or affiliates of Parent or any of its Subsidiaries, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement. The
Independent Directors shall have the authority to retain such counsel and other
advisors at the expense of the Company as are reasonably appropriate to the
exercise of their duties in connection with this Agreement, subject to approval
by the Company of the terms of such retention, which approval shall not be
unreasonably withheld. In addition, the Independent Directors shall have the
authority to institute any action, on behalf of the Company, to enforce
performance of this Agreement.
Section 2.04. ADJUSTMENT OF THE EXCHANGE OFFER RATIO. In the event Parent
changes or establishes a record date for changing the number of shares of
Parent Common Stock issued and outstanding during or after the determination of
the Exchange Offer Ratio pursuant to Section 2.01(c) and prior to the
expiration date of the Exchange Offer, as a result of a stock split, stock
dividend, recapitalization, subdivision, reclassification, combination or
similar transaction with respect to the outstanding shares of Parent Common
Stock and the record date therefor shall be prior to the expiration date of the
Exchange Offer, the Exchange Offer Ratio, and any other calculations based on
or relating to shares of Parent Common Stock shall be appropriately adjusted to
reflect such stock split, stock dividend, recapitalization, subdivision,
reclassification, combination or similar transaction.
ARTICLE 3
THE MERGER
Section 3.01. THE MERGER. (a) At the Effective Time (as defined below), the
Company shall be merged with (the "Merger") and into Merger Co. in accordance
with Section 251 or Section 253 of Delaware Law, as applicable, whereupon the
separate existence of the Company shall cease, and Merger Co. shall be the
surviving corporation and wholly-owned subsidiary of Parent (the "Surviving
Corporation").
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(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Company and Merger Co.
will file a certificate of merger with the Secretary of State of the State of
Delaware and make all other filings or recordings required by Delaware Law in
connection with the Merger. The Merger shall become effective at such time as
the certificate of merger is duly filed with the Secretary of State of the
State of Delaware or at such later date or time as is specified in the
certificate of merger (the "Effective Time").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the property, rights, privileges, immunities, powers and franchises
and be subject to all of the debts, liabilities, obligations, restrictions,
disabilities and duties of the Company and Merger Co., all as provided under
Delaware Law.
Section 3.02. CONVERSION OF SHARES. At the Effective Time:
(a) each share of Company Common Stock held by the Company or any Subsidiary
as treasury stock or owned by Parent or any subsidiary of Parent immediately
prior to the Effective Time shall be canceled, and no payment shall be made
with respect thereto;
(b) each share of common stock, par value $0.05 per share, of Merger Co.
outstanding immediately prior to the Effective Time shall be converted into and
become one share of common stock, par value $0.05 per share, of the Surviving
Corporation with the same rights, powers and privileges as the shares so
converted; and
(c) each share of Company Common Stock outstanding immediately prior to the
Effective Time shall, except as otherwise provided in Section 3.02(a), be
converted into the right to receive from Parent a number of shares (the "Merger
Consideration") of Parent Common Stock determined as set forth below (the
"Exchange Ratio"):
(i) If the Average Parent Common Stock Price is equal to or greater than
$15.40, the Exchange Ratio shall be 1.948 shares of Parent Common Stock;
(ii) If the Average Parent Common Stock Price is less than $15.40 and greater
than $12.60, the Exchange Ratio shall be determined by dividing $30.00
by the Average Parent Common Stock Price; and
(iii) If the Average Parent Common Stock Price is equal to or less than $12.60
the Exchange Ratio shall be 2.381 shares of Parent Common Stock.
For purposes of this Section 3.02, "Average Parent Common Stock Price" means
the average of the closing price per share of Parent Common Stock on the New
York Stock Exchange, Inc. (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.
Section 3.03. SURRENDER AND PAYMENT. (a) Prior to the Effective Time, Parent
shall appoint an agent reasonably acceptable to the Company (the "Exchange
Agent") for the purpose of exchanging certificates representing shares of
Company Common Stock for the Merger Consideration. Parent shall cause Merger
Co. to make available to the Exchange Agent, as soon as reasonably practicable
as of or after the Effective Time, the Merger Consideration to be delivered in
respect of the shares of Company Common Stock. Promptly after the Effective
Time, the Surviving Corporation will send, or will cause the Exchange Agent to
send, to each holder of shares of Company Common Stock at the Effective Time a
letter of transmittal for use in such exchange (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the certificates representing shares of Company Common Stock
to the Exchange Agent).
(b) Each holder of shares of Company Common Stock that have been converted
into a right to receive the Merger Consideration, upon surrender to the
Exchange Agent of a certificate or certificates representing such shares of
Company Common Stock, together with a duly executed and properly completed
letter of transmittal covering such shares of Company Common Stock, will be
entitled to receive the Merger Consideration in
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exchange for such shares of Company Common Stock. Until so surrendered, each
such certificate shall, after the Effective Time, represent for all purposes,
only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be delivered to a
Person other than the registered holder of the shares of Company Common Stock
represented by the certificate or certificates surrendered in exchange
therefor, it shall be a condition to such delivery that the certificate or
certificates so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the Person requesting such delivery shall pay
to the Exchange Agent any transfer or other taxes required as a result of such
delivery to a Person other than the registered holder of such shares of Company
Common Stock or establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable. For purposes of this Agreement, "Person"
means an individual, a corporation, a limited liability company, a partnership,
an association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration of
transfers of shares of Company Common Stock. If, after the Effective Time,
certificates representing shares of Company Common Stock are presented to the
Surviving Corporation, they shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set forth, in
this Article 3.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 3.03(a) that remains unclaimed by the holders of
shares of Company Common Stock six months after the Effective Time shall be
returned to the Surviving Corporation, upon demand, and any such holder who has
not exchanged his shares of Company Common Stock for the Merger Consideration
in accordance with this Section prior to that time shall thereafter look only
to the Surviving Corporation for delivery of the Merger Consideration in
respect of his shares of Company Common Stock. Notwithstanding the foregoing,
the Surviving Corporation shall not be liable to any holder of shares of
Company Common Stock for any amount paid to a public official pursuant to
applicable abandoned property laws.
(f) If any certificate representing shares of Company Common Stock shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such person of a
bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such
certificate, the Exchange Agent (or the Surviving Corporation) shall exchange
the shares of Company Common Stock represented by such lost, stolen or
destroyed certificate for the Merger Consideration.
Section 3.04. STOCK OPTIONS. (a) At or immediately prior to the Effective
Time, each employee stock option or director stock option to purchase Shares
outstanding under any Company stock option plans, whether or not vested or
exercisable (each, a "Company Option") shall, by virtue of the Merger and
without any further action on the part of any holder thereof, be assumed by
Parent and deemed to constitute an option (each, a "Parent Option") to acquire,
on the same terms and conditions as were applicable under such Company Option
(subject to Section 3.04(b)), the same number of shares of Parent Common Stock
as the holder of such Company Option would have been entitled to receive
pursuant to Section 3.02(c) of this Agreement had such holder exercised such
Company 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 share of Company Common
Stock otherwise purchasable pursuant to such Company Option divided by (y) the
number of whole shares of Parent Common Stock purchasable pursuant to the
Parent Option in accordance with the foregoing. The other terms of each such
Company Option, and the plans under which they were issued, shall continue to
apply in accordance with their terms.
(b) Prior to the Effective Time, the Company shall use its reasonable best
efforts to (i) obtain any consents from holders of Company Options and (ii)
make any amendments to the terms of such Company Options or Company stock
option plans that, in the case of either clauses (i) or (ii), are necessary or
appropriate to give effect to the transactions contemplated by Section 3.04(a);
PROVIDED, HOWEVER, that lack of consent of any holder of a Company Option shall
in no way affect the obligations of the parties to consummate the Merger.
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(c) At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of
Parent Common Stock for delivery upon exercise of the Parent Options. At or
prior to the Effective Time, Parent shall file a registration statement on Form
S-8, with respect to the shares of Parent Common Stock subject to such Parent
Options and shall 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 Parent
Options remaining outstanding. With respect to those individuals who subsequent
to the Merger will be subject to the reporting requirements under Section 16(a)
of the Exchange Act, Parent shall administer the Company stock option plans in
a manner consistent with the exemptions provided by Rule 16(b)(3) promulgated
under the Exchange Act.
Section 3.05. WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise deliverable to any Person pursuant to this Article 3 such amount as
it is required to deduct and withhold with respect to the making of such
delivery under any provision of federal, state, local or foreign tax law. If
the Surviving Corporation or Parent, as the case may be, so withholds amounts,
such amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Company Common Stock in respect of which
the Surviving Corporation or Parent made such deduction and withholding.
Section 3.06. TERMINATED TENDER OFFEr. In the event the Offer is terminated
pursuant to Section 2.01(d) ("Terminated Tender Offer") the parties hereto
shall complete the Merger consistent with the terms of this Agreement as
amended by the terms and provisions contained in Annex III, and this Agreement
shall be amended to incorporate the terms contained therein.
Section 3.07. ADJUSTMENT OF EXCHANGE RATIO. In the event Parent changes or
establishes a record date for changing the number of shares of Parent Common
Stock issued and outstanding during or after the determination of the Exchange
Ratio pursuant to Section 3.02(c) and prior to the Effective Time as a result
of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination or similar transaction with respect to the
outstanding Parent Common Stock and the record date therefor shall be prior to
the Effective Time, the Exchange Ratio, and any other calculation based on or
relating to shares of Parent Common Stock shall be appropriately adjusted to
reflect such stock split, stock dividend, recapitalization, subdivision,
reclassification, combination or similar transaction.
ARTICLE 4
THE SURVIVING CORPORATION
Section 4.01. CERTIFICATE OF INCORPORATION. The certificate of incorporation
of Merger Co. in effect at the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance with
applicable law.
Section 4.02. BYLAWS. The bylaws of Merger Co. in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 4.03. DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (a) the directors of Merger Co. at the Effective Time shall be
the directors of the Surviving Corporation, and (b) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as of the date hereof and as
of the Effective Time that:
Section 5.01. CORPORATE EXISTENCE AND POWEr. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), business, assets, liabilities or results of
operations of the Company and the Subsidiaries taken as a whole ("Material
Adverse Effect"). The Company has heretofore delivered or made available to
Parent true and complete copies of the Company's certificate of incorporation
and bylaws as currently in effect.
Section 5.02. CORPORATE AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the Company's
corporate powers and, except for the approval by the Company's stockholders by
a majority vote in connection with the consummation of the Merger (which vote
will not be required if Merger Co. owns at least 90% of the issued and
outstanding shares of Company Common Stock), have been duly authorized by all
necessary corporate and stockholder action under the Company's constituent
documents and Delaware Law. This Agreement constitutes a valid and binding
agreement of the Company.
Section 5.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law; (b) compliance with any
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act"); (c) compliance with any applicable non-United States laws
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade; and (d) compliance with any applicable
requirements of the Exchange Act.
Section 5.04. NON-CONTRAVENTION. Except as set forth in Schedule 5.04, the
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby do not and
will not (a) contravene or conflict with the certificate of incorporation or
bylaws of the Company, (b) assuming compliance with the matters referred to in
Section 5.03, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, writ, injunction, order or decree
of any court or governmental authority binding upon or applicable to the
Company or any Subsidiary or any of their properties or assets, (c) constitute
a default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any Subsidiary or to
a loss of any benefit to which the Company or any Subsidiary is entitled under
any provision of any material agreement, contract or other instrument binding
upon the Company or any Subsidiary or any license, franchise, permit or other
similar authorization held by the Company or any Subsidiary, or (d) result in
the creation or imposition of any Lien on any asset of the Company or any
Subsidiary, except, in the case of clauses (b), (c) and (d) of this Section
5.04, for any such violation, failure to obtain any such consent or other
action, default, right, loss or Lien that would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect. For
purposes of this Agreement, "Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset. The Rawhide Merger Agreement has been terminated in
accordance with its terms (subject to payment of the amount described in the
following clause), and the Company is obligated to pay, on Tuesday, January 2,
2001, $66,500,000 to Rawhide Holdings Corporation which represents all amounts
required to be paid by the Company under the Rawhide Merger Agreement and the
Company has no other financial liabilities thereunder. Immediately prior to the
execution hereof, Rawhide
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Holdings Corporation has agreed to waive the three day period to submit a new
offer provided for in Section 10.01(e) of the Rawhide Merger Agreement.
Section 5.05. CAPITALIZATION. The authorized capital stock of the Company
consists of 200,000,000 shares of Company Common Stock and 25,000,000 shares of
preferred stock, par value $1.00 per share (the "Preferred Stock"). As of the
close of business on December 28, 2000, there were issued and outstanding
105,644,598 shares of Common Stock and no shares of Preferred Stock. As of the
close of business on December 28, 2000, there were outstanding stock options to
purchase an aggregate of 4,891,500 shares of Company Common Stock (of which
options to purchase an aggregate of 2,697,500 shares of Company Common Stock
were exercisable). All outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth in Schedule 5.05 and this Section and except for changes
since December 28, 2000 resulting from the exercise of employee stock options
outstanding on such date, there are outstanding (a) no shares of capital stock
or other voting securities of the Company, (b) no securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, and (c) no options or other rights to acquire from
the Company or any Subsidiary, and no obligation of the Company or any
Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company (the items in clauses (a), (b) and (c) of this Section 5.05 being
referred to collectively as the "Company Securities"). There are no outstanding
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any Company Securities.
Section 5.06. SUBSIDIARIES. (a) Each Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. For purposes of this
Agreement, "Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are directly or indirectly owned by the Company and/or one or more
Subsidiaries. All Subsidiaries and their respective jurisdictions of
incorporation are identified in Schedule 5.06.
(b) Except as set forth in Schedule 5.06, all of the outstanding capital
stock of, or other ownership interests in, each Subsidiary, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests). There are no outstanding (i) securities of the Company or any
Subsidiary convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary, and (ii)
options or other rights to acquire from the Company or any Subsidiary, and no
other obligation of the Company or any Subsidiary to issue, any capital stock,
voting securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting securities or
ownership interests in, any Subsidiary (the items in clauses (i) and (ii) of
this Section 5.06(b) being referred to collectively as the "Subsidiary
Securities"). There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
Section 5.07. SEC FILINGS. (a) The Company has delivered or made available
to Parent (i) the Company's annual report on Form 10-K for the year ended
December 25, 1999 (the "Company 10-K"), (ii) its quarterly report on Form 10-Q
for its fiscal quarter ended September 23, 2000, its quarterly report on Form
10-Q for its fiscal quarter ended June 24, 2000 (as amended) and its quarterly
report on Form 10-Q for its fiscal quarter ended March 25, 2000 (together, the
"Company 10-Qs"), (iii) its proxy or information statements relating to
meetings of, or actions taken without a meeting by, the stockholders of the
Company held since January 1, 1998, and (iv) all of its other reports,
statements, schedules and registration statements filed with the SEC since
January 1, 1998.
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(b) As of its filing date, each such report or statement filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), as of the date such statement or amendment became effective
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
Section 5.08. FINANCIAL STATEMENTS. The audited consolidated financial
statements of the Company included in the Company 10-K and the unaudited
consolidated financial statements of the Company included in the Company 10-Qs
each fairly present, in all material respects, in conformity with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements). For purposes of this Agreement,
"Balance Sheet" means the consolidated balance sheet of the Company as of
December 25, 1999 set forth in the Company 10-K and "Balance Sheet Date" means
December 25, 1999.
Section 5.09. DISCLOSURE DOCUMENTS. (a) Each document required to be filed
by the Company with the SEC in connection with the transactions contemplated by
this Agreement (the "Company Disclosure Documents"), including, without
limitation, (i) the Exchange Schedule 14D-9 (including information required by
Rule 14f-1 under the Exchange Act), the Schedule 14D-9/A (including information
required by Rule 14f-1 under the Exchange Act) and (iii) the proxy or
information statement of the Company containing information required by
Regulation 14A under the Exchange Act (the "Company Proxy Statement"), if any,
to be filed with the SEC in connection with the Offer or the Merger and any
amendments or supplements thereto will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act except
that no representation or warranty is made hereby with respect to any
information furnished to the Company by Parent in writing specifically for
inclusion in the Company Disclosure Documents.
(b) At the time the Schedule 14D-9/A, the Exchange Schedule 14D-9 and the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to stockholders of the Company, and, with respect to the Company Proxy
Statement only, at the time such stockholders vote on adoption of this
Agreement and at the Effective Time, the Schedule 14D-9/A, the Exchange
Schedule 14D-9 and the Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
At the time of the filing of any Company Disclosure Document other than the
Company Proxy Statement and at the time of any distribution thereof, such
Company Disclosure Document will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section
5.09(b) will not apply to statements or omissions included in the Company
Disclosure Documents based upon information furnished to the Company in writing
by Parent specifically for use therein.
(c) Neither the information with respect to the Company or any Subsidiary
that the Company furnishes in writing to Parent specifically for use in the
Parent Disclosure Documents (as defined in Section 6.09(a)) nor the information
incorporated by reference from documents filed by the Company with the SEC
will, at the time of the provision thereof to Parent or at the time of the
filing thereof by the Company with the SEC, as the case may be, at the time of
the meeting of the Company's stockholders, if any, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading.
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Section 5.10. ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule
5.10 hereto, the Company 10-K or the Company 10-Qs, since the Balance Sheet
Date, the Company and the Subsidiaries have conducted their business in the
ordinary course consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of circumstances or
facts which has had or reasonably could be expected to have a Material
Adverse Effect;
(b) other than regular quarterly dividends in an amount not in excess of
$.025 per share per quarter, any declaration, setting aside or payment of
any dividend or other distribution with respect to any shares of capital
stock of the Company, or any repurchase, redemption or other acquisition by
the Company or any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company or any
Subsidiary;
(c) any amendment of any material term of any outstanding security of the
Company or any Subsidiary that could reasonably be expected to be materially
adverse to the Company;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past
practices;
(e) any creation or assumption by the Company or any Subsidiary of any
material Lien on any material asset other than in the ordinary course of
business consistent with past practices;
(f) any making of any material loan, advance or capital contributions to
or investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries made in the
ordinary course of business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other
right, in either case, that has had or would reasonably be expected to have
a Material Adverse Affect, other than transactions and commitments in the
ordinary course of business consistent with past practice and those
contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice by the
Company or any Subsidiary, except for any such change required by reason of
a concurrent change in generally accepted accounting principles;
(j) any (i) grant of any severance or termination pay to any director or
executive officer of the Company or any Subsidiary, (ii) entering into of
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director or executive
officer of the Company or any Subsidiary, (iii) material increase in
benefits payable under any existing severance or termination pay policies or
employment agreements or (iv) increase in compensation, bonus or other
benefits payable to directors, officers or employees of the Company or any
Subsidiary, other than in each case in the ordinary course of business
consistent with past practice;
(k) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any Subsidiary, which employees
were not subject to a collective bargaining agreement at the Balance Sheet
Date, or any lockouts, strikes, slowdowns, work stoppages or threats thereof
by or with respect to such employees which have had or could reasonably be
expected to have a Material Adverse Effect; or
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(l) any cancellation of any licenses, sublicenses, franchises, permits or
agreements to which the Company or any Subsidiary is a party, or any
notification to the Company or any Subsidiary that any party to any such
arrangements intends to cancel or not renew such arrangements beyond its
expiration date as in effect on the date hereof, which cancellation or
notification, individually or in the aggregate, has had or reasonably could
be expected to have a Material Adverse Effect.
Section 5.11. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set forth in
Schedule 5.11, the Company 10-K or the Company 10-Qs, there are no liabilities
of the Company or any Subsidiary of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than:
(a) liabilities disclosed or provided for in the Balance Sheet;
(b) liabilities incurred in the ordinary course of business consistent
with past practice since the Balance Sheet Date or as otherwise specifically
contemplated by this Agreement;
(c) liabilities under this Agreement; and
(d) other liabilities which individually or in the aggregate do not and
could not reasonably be expected to have a Material Adverse Effect.
Section 5.12. LITIGATION. Except as set forth in Schedule 5.12, the Company
10-K or the Company 10-Qs, there is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or to the knowledge of the
Company threatened against or affecting, the Company or any Subsidiary or any
of their respective properties before any court or arbitrator or any
governmental body, agency or official which could reasonably be expected to
have a Material Adverse Effect, or which as of the date hereof in any manner
challenges or seeks to prevent enjoin, alter or materially delay the Merger or
any of the other transactions contemplated hereby.
Section 5.13. TAXES. (a) Except as set forth in Schedule 5.13 or as would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect:
(i)all Tax returns, statements, reports and forms (including estimated Tax
returns and reports and information returns and reports) required to be
filed with any taxing authority with respect to any Tax period (or
portion thereof) ending on or before the Effective Time (a "Pre-Closing
Tax Period") by or on behalf of the Company or any Subsidiary of the
Company (collectively, the "Returns"), were filed when due (including
any applicable extension periods) in accordance with all applicable
laws; as of the time of filing, the Returns were true and complete in
all material respects;
(ii)the Company and its Subsidiaries have timely paid, or withheld and
remitted to the appropriate Taxing authority, all Taxes shown as due and
payable on the Returns that have or should have been filed;
(iii)the charges, accruals and reserves for Taxes with respect to the Company
and any Subsidiary for any Pre-Closing Tax Period or Straddle Period
(including any Pre-Closing Tax Period or Straddle Period for which no
Return has yet been filed) reflected on the Balance Sheet (in addition
to any provision for deferred income Taxes) are adequate to cover such
Taxes as of the Balance Sheet Date. "Straddle Period" is any tax period
beginning before the Effective Time but ending after the Effective Time.
(iv)there is no claim (including under any indemnification or Tax-sharing
agreement), audit, action, suit, proceeding, or investigation now
pending or threatened in writing against or in respect of any Tax or
"Tax asset" of the Company or any Subsidiary. For purposes of this
Section 5.13 and Section 6.13, the term "Tax Asset" shall include any
net operating loss, net capital loss, investment Tax credit, foreign Tax
credit, charitable deduction or any other credit or Tax attribute which
could be carried forward or back to reduce Taxes;
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(v)there are no Liens for Taxes upon the assets of the Company or its
Subsidiaries except for Liens for current Taxes not yet due; and
(vi)neither the Company nor any Subsidiary is currently under any obligation
to pay any amounts of the type described in clause (ii) or (iii) of the
definition of "Tax", regardless of whether such Tax is imposed on the
Company or any Subsidiary.
(b) For purposes of this Section 5.13, "tax" or "Tax" means (i) any tax,
governmental fee or other like assessment or charge of any kind whatsoever
(including, but not limited to, withholding on amounts paid to or by any
Person), together with any interest, penalty, addition to tax or additional
amount imposed by any governmental authority responsible for the imposition of
any such tax (domestic or foreign), (ii) in the case of the Company or any
Subsidiary, liability for the payment of any amount of the type described in
clause (i) as a result of being or having been before the Effective Time a
member of an affiliated, consolidated, combined or unitary group (other than
such a group of which the Company or any of its Subsidiaries is the common
parent), or a party to any agreement or arrangement, as a result of which
liability of the Company or any Subsidiary to a taxing authority is determined
or taken into account with reference to the liability of any other Person, and
(iii) liability of the Company or any Subsidiary for the payment of any amount
as a result of being party to any tax sharing agreement or with respect to the
payment of any amount of the type described in (i) or (ii) as a result of any
existing express obligation (including, but not limited to, an indemnification
obligation).
Section 5.14. ERISA. (a) Schedule 5.14 contains a correct and complete list
identifying each material "employee benefit plan", as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974 ("ERISA"), each
employment, severance or similar contract, plan, arrangement or policy and each
other plan or arrangement (written or oral) providing for compensation,
bonuses, profit-sharing, stock option or other stock related rights or other
forms of incentive or deferred compensation, vacation benefits, insurance
(including any self-insured arrangements), health or medical benefits, employee
assistance program, disability or sick leave benefits, workers' compensation,
supplemental unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health, medical or life
insurance benefits) which is maintained, administered or contributed to by the
Company or any Subsidiary and covers any employee or former employee of the
Company or any Subsidiary, or with respect to which the Company or any
Subsidiary has any liability with respect to any employee or former employee of
the Company or any Subsidiary (other than any such plan, contract, policy or
arrangement that is an International Plan, as defined below). Copies of such
plans (and, if applicable, related trust or funding agreements or insurance
policies) and all amendments thereto and written interpretations thereof have
been made available to Parent together with the most recent annual report (Form
5500 including, if applicable, Schedule B thereto) and tax return (Form 990)
prepared in connection with any such plan or trust. Such plans are referred to
collectively herein as the "Employee Plans". For purposes of this Section 5.14,
"ERISA Affiliate" of any Person means any other Person which, together with
such Person, would be treated as a single employer under Section 414 of the
Internal Revenue Code of 1986, as amended (the "Code").
(b) Schedule 5.14 separately identifies each material Employee Plan that is
subject to Title IV of ERISA (other than a Multiemployer Plan, as defined
below) (a "Title IV Plan"). Schedule 5.14 separately identifies each Employee
Plan which is a multiemployer plan, as defined in Section 3(37) of ERISA (a
"Multiemployer Plan"). Except as would not reasonably be expected to have a
Material Adverse Affect, if a "complete withdrawal" by Seller and all of its
ERISA Affiliates were to occur as of the Effective Time with respect to all
Multiemployer Plans, to the knowledge of the Company, none of the Company, any
Subsidiary or any of their ERISA Affiliates would incur any withdrawal
liability under Title IV of ERISA. Neither the Company nor any ERISA Affiliate
of the Company has incurred any liability under Title IV of ERISA (other than
for PBGC Premium not yet due).
(c) A current favorable Internal Revenue Service determination letter is in
effect with respect to each Employee Plan which is intended to be qualified
under Section 401(a) of the Code (or the relevant remedial amendment period has
not expired with respect to such Employee Plan), and the Company knows of no
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circumstance giving rise to a material likelihood that such letter could be
revoked by the Internal Revenue Service. The Company has made available to
Parent copies of the most recent Internal Revenue Service determination letters
with respect to each such Plan. Each Employee Plan has been maintained in
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including but not limited to ERISA and
the Code, which are applicable to such Employee Plan, other than any
non-compliance which would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. No events have occurred with
respect to any Employee Plan that would reasonably be expected to result in
payment or assessment of any material excise taxes under Sections 4972, 4975,
4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code, other than any
excise taxes which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(d) Except as set forth in Schedule 5.14, the consummation of the
transactions contemplated by this Agreement will not (either alone or together
with any termination of employment) entitle any employee or independent
contractor of the Company or any Subsidiary to severance pay or accelerate the
time of payment or vesting or trigger any payment of funding (through a grantor
trust or otherwise) of material compensation or benefits under, materially
increase the amount payable or trigger any other material obligation pursuant
to, any Employee Plan.
(e) Neither the Company nor any Subsidiary has any liability in respect of
post-retirement health, medical or life insurance benefits for retired, former
or current employees of the Company or its Subsidiaries except for coverage
under Section 4980B of the Code or coverage the full cost of which is paid for
by the retired, former or current employee.
(f) There has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its Affiliates relating to,
or change in employee participation or coverage under, an Employee Plan which
would increase the expense of maintaining such Employee Plan above the level of
the expense incurred in respect thereof for the fiscal year ended December 25,
1999, except for any such increase which would not reasonably be expected to
have a Material Adverse Effect.
(g) Except as previously disclosed to Parent, neither the Company nor any
Subsidiary is a party to or subject to, or is currently negotiating in
connection with entering into, any collective bargaining agreement or other
contract or understanding with a labor union or labor organization.
(h) Except for any failures which would not be reasonably expected to have a
Material Adverse Effect, all contributions and payments accrued under each
Employee Plan, determined in accordance with prior funding and accrual
practices, as adjusted to include proportional accruals for the period ending
as of the date hereof, have been discharged and paid on or prior to the date
hereof except to the extent reflected as a liability on the Balance Sheet.
(i) Schedule 5.14(i) identifies each International Plan (as defined below)
covering 100 employees or more. The Company has furnished to Parent copies of
each International Plan. Each International Plan has been maintained in
compliance with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations (including any special
provisions relating to qualified plans where such Plan was intended to so
qualify) and has been maintained in good standing with applicable regulatory
authorities, other than any non-compliance which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
There has been no amendment to, written interpretation of or announcement
(whether or not written) by the Company or any Subsidiary relating to, or
change in employee participation or coverage under, any International Plan that
would increase the expense of maintaining such International Plan above the
level of expense incurred in respect thereof for the most recent fiscal year
ended prior to the date hereof, except for any such increase which would not
reasonably be expected to have a Material Adverse Effect. For purposes of this
Section 5.14, "International Plan" means any employment, severance or similar
contract or arrangement (whether or not written) or any plan, policy, fund,
program or arrangement or contract providing for severance, insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits,
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supplemental unemployment benefits, vacation benefits, pension or retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits that (i) is intended
primarily for the benefit of employees or beneficiaries based outside the U.S.,
(ii) is entered into, maintained, administered or contributed to by the Company
or any Subsidiary and (iii) covers any employee or former employee of the
Company or any Subsidiary.
Section 5.15. LABOR MATTERS. Except as set forth in Schedule 5.15 and except
for such matters as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, there are no (i) labor strikes,
disputes, slowdowns, representation or certification campaigns or work
stoppages or other concerted activities with respect to employees of any of the
Company or any Subsidiary pending, or to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary, (ii) grievance
or arbitration proceedings, decisions, side letters, letter agreements, letters
of understanding or settlement agreements arising out of collective bargaining
agreements to which the Company or any Subsidiary is a party, (iii) unfair
labor practice complaints pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary, or (iv) activities or
proceedings of any labor union or employee association to organize any such
employees.
(b) Except to the extent set forth in Schedule 5.15 and except for such
matters as would not, individually or in the aggregate, have a Material Adverse
Effect, the Company and its Subsidiaries are in compliance with all applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours.
(c) Except to the extent set forth in Schedule 5.15 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, there are no pending administrative matters
with any federal, provincial, state or local agencies regarding (i) violations
or alleged violations of any federal, provincial, state or local wage and hour
law or any federal, provincial, state or local law with respect to
discrimination on the basis of race, color, creed, national origin, religion or
any other basis under such federal, provincial, state or local law, (ii) any
claimed violation of Title VII of the 1964 Civil Rights Act, as amended, (iii)
any allegation or claim arising out of Executive Order 11246 or any other
applicable order relating to governmental contractors or state contractors, or
(iv) any violation or alleged violation of the Age Discrimination and
Employment Act, as amended, or any other federal, provincial, state or local
statute or ordinance, or any other applicable laws with respect to wages,
hours, employment practices and terms and conditions of employment.
Section 5.16. COMPLIANCE WITH LAWS. Except to the extent set forth in
Schedules 5.11, 5.12 and 5.19, neither the Company nor any Subsidiary is in
violation of, or has since January 1, 1999 violated, and to the knowledge of
the Company none is under investigation with respect to or has been threatened
to be charged with or given notice of any violation of, any applicable law,
rule, regulation, judgment, injunction, order or decree, except for violations
that have not had and would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
Section 5.17. LICENSES AND PERMITS. Except as set forth on Schedule 5.17 and
except where the failure of the following to be true would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (i) the Company or its Subsidiaries own, hold or possess adequate right
to use all material licenses, franchises, permits, certificates, approvals or
other similar authorizations affecting, or relating in any way to, the assets
or business of the Company and its Subsidiaries (the "Permits") required in
connection with the operation of the business of the Company and its
Subsidiaries, (ii) the Permits are valid and in full force and effect, (iii)
neither the Company nor any Subsidiary is in default under, and no condition
exists that with notice or lapse of time or both would constitute a default
under, the Permits and (iv) none of the Permits will be terminated or impaired
or become terminable, in whole or in part, as a result of the transactions
contemplated hereby.
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Section 5.18. INTELLECTUAL PROPERTY. Except as set forth in Schedule 5.18,
the Company and the Subsidiaries own or possess adequate licenses or other
rights to use all Intellectual Property Rights necessary to conduct the
business now operated by them, except where the failure to own or possess such
licenses or rights has not had and would not be reasonably likely to have a
Material Adverse Effect and, to the knowledge of the Company, the Intellectual
Property Rights of the Company and the Subsidiaries do not conflict with or
infringe upon any Intellectual Property Rights of others to the extent that, if
sustained, such conflict or infringement has had and would be reasonably likely
to have a Material Adverse Effect. For purposes of this Agreement, an
"Intellectual Property Right' means any trademark, service mark, trade name,
mask work, copyright, patent, software license, other data base, invention,
trade secret, know-how (including any registrations or applications for
registration of any of the foregoing) or any other similar type of proprietary
intellectual property right.
Section 5.19. ENVIRONMENTAL MATTERS. (a) Except for such matters,
individually or in the aggregate, as would not be reasonably expected to have a
Material Adverse Effect or as set forth in Schedule 5.19, the Company 10-K or
the Company 10-Qs:
(i)no notice, notification, demand, request for information, citation,
summons or order has been received, no complaint has been filed, no
penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review (or any basis therefor) is pending or, to the
knowledge of the Company or any Subsidiary, is threatened by any
governmental entity or other Person with respect to any matters
relating to the Company or any Subsidiary and relating to or arising
out of any Environmental Law;
(ii)there are no liabilities of or relating to the Company or any
Subsidiary of any kind whatsoever whether accrued, contingent,
absolute, determined, determinable or otherwise, arising under or
relating to any Environmental Law, and there are no facts,
conditions, situations or set of circumstances that could reasonably
be expected to result in or be the basis for any such liability;
(iii)the Company and its Subsidiaries are and have been in compliance with
all Environmental Laws and have obtained and are in compliance with
all Environmental Permits; and
(iv)no Hazardous Substance has been discharged, disposed of, dumped,
injected, pumped, deposited, spilled, leaked, emitted or released at
any property now or previously owned, leased or operated by the
Company or any Subsidiary.
For purposes of this Section 5.19(a), the "Company" and "Subsidiary" shall
include any entity which is, in whole or in part, a predecessor of the Company
or any Subsidiary.
(b) Since January 1, 1997, except as set forth in Schedule 5.19, there has
been no written environmental investigation, study, audit, test, review or
other analysis conducted of which the Company has knowledge in relation to the
current or prior business of the Company or any Subsidiary or any property or
facility now or previously owned, leased or operated by the Company or any
Subsidiary which has not been delivered (to the extent the Company has
possession thereof) to Parent at least five days prior to the date hereof.
(c) Except as set forth in Schedule 5.19, neither the Company nor any
Subsidiary owns, leases or operates or has owned, leased or operated any real
property, or conducts or has since January 1, 1997 conducted any operations, in
New Jersey or Connecticut.
(d) For purposes of this Section 5.19, the following terms shall have the
meanings set forth below:
"ENVIRONMENTAL LAWS" means any federal, state, provincial, local and
foreign law (including, without limitation, common law), treaty, judicial
decision, regulation, rule, judgment, order, decree, injunction, permit or
governmental restriction or requirement or any agreement or contract with
any governmental authority or other third party, relating to human health
and safety, the environment or to pollutants, contaminants, wastes or
chemicals or any toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substances, wastes or materials.
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"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting the
business of the Company or any of its Subsidiaries as currently conducted.
"HAZARDOUS SUBSTANCES" means any pollutant, contaminant, waste or
chemical or any toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substance, waste or material, or any substance, waste or
material having any constituent elements displaying of the foregoing
characteristics, including, without limitation, petroleum, its derivatives,
by-products and other hydrocarbons, which in any event is regulated under
Environmental Laws.
Section 5.20. FINDERS' FEES. Except for J.P. Morgan Securities Inc. and
Peter J. Solomon Company Limited, a copy of whose engagement agreements have
been provided to Parent, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
the Company or any Subsidiary who might be entitled to any fee or commission
from Parent or any of its affiliates upon consummation of the transactions
contemplated by this Agreement.
Section 5.21. INAPPLICABILITY OF CERTAIN RESTRICTIONS. The Company has taken
all action necessary to exempt the Offer, the Exchange Offer, the Merger, this
Agreement, and the transactions contemplated hereby from Section 203 of the
Delaware Law. Unless Merger Co. owns at least 90% of the issued and outstanding
shares of Company Common Stock, the adoption of this Agreement by the
affirmative vote of the holders of shares of Company Common Stock entitling
such holders to exercise at least a majority of the voting power of the shares
of Company Common Stock is the only vote of holders of any class or series of
the capital stock of the Company required to adopt this Agreement, or to
approve the Merger or any of the other transactions contemplated hereby and no
higher or additional vote is required pursuant to the Company's Certificate of
Incorporation or otherwise.
Section 5.22. RIGHTS PLAN. The Company has not entered into, and its Board
of Directors has not adopted or authorized the adoption of, a shareholder
rights or similar agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as of the date hereof and as
of the Effective Time that:
Section 6.01. CORPORATE EXISTENCE AND POWER. Parent is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware
and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. Parent is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), business,
assets, liabilities or results of operations of Parent and the Parent
Subsidiaries taken as a whole ("Parent Material Adverse Effect"). Parent has
heretofore delivered to the Company true and complete copies of Parent's
certificate of incorporation and bylaws as currently in effect.
Section 6.02. CORPORATE AUTHORIZATION. The execution, delivery and
performance by Parent and Merger Co. of this Agreement and the consummation by
Parent and Merger Co. of the transactions contemplated hereby are within the
corporate powers of Parent and Merger Co. and have been duly authorized by all
necessary corporate and stockholder action. This Agreement constitutes a valid
and binding agreement of each of Parent and Merger Co.
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Section 6.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Parent and Merger Co. of this Agreement and the consummation by
Parent and Merger Co. of the transactions contemplated by this Agreement
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority other than (a) the filing of a certificate of
merger in accordance with Delaware Law; (b) compliance with any applicable
requirements of the HSR Act; (c) compliance with any applicable non-United
States laws intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade; and (d) compliance
with any applicable requirements of the Securities Act and the Exchange Act.
Section 6.04. NON-CONTRAVENTION. Except as set forth in Schedule 6.04, the
execution, delivery and performance by Parent and Merger Co. of this Agreement
and the consummation by Parent and Merger Co. of the transactions contemplated
hereby do not and will not (a) contravene or conflict with the certificate of
incorporation or bylaws of Parent or Merger Co., (b) assuming compliance with
the matters referred to in Section 6.03, contravene or conflict with any
provision of law, regulation, judgment, writ, injunction, order or decree of
any court or governmental authority binding upon or applicable to Parent or
Merger Co. or any of their properties or assets, or (c) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Parent or Merger Co. or to a loss of any benefit to
which Parent or Merger Co. is entitled under any provision of any material
agreement, contract or other instrument binding upon Parent or Merger Co. or
any license, franchise, permit or other similar authorization held by the
Parent or Merger Co., or (d) result in the creation or imposition of any Lien
on any asset of the Parent or Merger Co., except, in the case of clauses (b),
(c) and (d) of this Section 6.04, for any such violation, failure to obtain any
such consent or other action, default, right, loss or Lien that would not,
individually or in the aggregate, be reasonably expected to have a Parent
Material Adverse Effect.
Section 6.05. CAPITALIZATION. The authorized capital stock of Parent
consists of 900,000,000 shares of Parent Common Stock and 900,000,000 shares of
Class B common stock, par value $0.10 per share (the "Class B Common Stock").
As of the close of business on December 28, 2000, there were outstanding
120,429,640 shares of Parent Common Stock and 102,645,048 shares of Class B
Common Stock. As of the close of business on December 2, 2000, there were
outstanding stock options to purchase an aggregate of 6,739,160 shares of
Parent Common Stock (of which options to purchase an aggregate of 3,743,535
shares of Parent Common Stock were exercisable). All outstanding shares of
capital stock of Parent have been duly authorized and validly issued and are
fully paid and nonassessable. Except for changes since December 2, 2000
resulting from the exercise of employee stock options outstanding on such date,
there are outstanding (a) no shares of capital stock or other voting securities
of the Company, (b) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
and (c) no options or other rights to acquire from the Company or any
Subsidiary, and no obligation of the Company or any Subsidiary to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Company (the items in clauses
(a), (b) and (c) of this Section 6.05 being referred to collectively as the
"Parent Securities"). There are no outstanding obligations of the Parent or any
Parent Subsidiary to repurchase, redeem or otherwise acquire any Parent
Securities.
Section 6.06. PARENT SUBSIDIARIES. (a) Each Parent Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted and is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect. For purposes
of this Agreement, "Parent Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are directly or indirectly owned by Parent and/or one or more Parent
Subsidiaries. All Parent Subsidiaries and their respective jurisdictions of
incorporation are identified in Schedule 6.06.
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(b) All of the outstanding capital stock of, or other ownership interests
in, each Parent Subsidiary, is owned by Parent, directly or indirectly, free
and clear of any Lien and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests). There are no outstanding (i)
securities of Parent or any Parent Subsidiary convertible into or exchangeable
for shares of capital stock or other voting securities or ownership interests
in any Parent Subsidiary, and (ii) options or other rights to acquire from
Parent or any Parent Subsidiary, and no other obligation of the Parent or any
Parent Subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or exchangeable for
any capital stock, voting securities or ownership interests in, any Parent
Subsidiary (the items in clauses (i) and (ii) of this Section 6.06(b) being
referred to collectively as the "Parent Subsidiary Securities"). There are no
outstanding obligations of Parent or any Parent Subsidiary to repurchase,
redeem or otherwise acquire any outstanding Parent Subsidiary Securities.
(c) Since the date of its incorporation, Merger Co. has not engaged in any
activities other than in connection with or as contemplated by this Agreement.
Section 6.07. SEC FILINGS. (a) Parent has delivered or made available to the
Company (i) Parent's annual report on Form 10-K for the year ended September
30, 2000 (the "Parent 10-K"), (ii) its proxy or information statements relating
to meetings of, or actions taken without a meeting by, the stockholders of the
Company held since January 1, 1998, and (iii) all of its other reports,
statements, schedules and registration statements filed with the SEC since
January 1, 1998.
(b) As of its filing date, each such report or statement filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act as of the date such statement
or amendment became effective did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
Section 6.08. PARENT FINANCIAL STATEMENTS. The audited consolidated
financial statements of Parent included in the Parent 10-K fairly present, in
all material respects, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and their consolidated
statements of income, stockholders' equity and cash flows for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements). For purposes of this Agreement, "Parent Balance
Sheet" means the consolidated balance sheet of Parent as of September 30, 2000
as set forth in the Company 10-K and "Parent Balance Sheet Date" means
September 30, 2000.
Section 6.09. DISCLOSURE DOCUMENTS. (a) Each document required to be filed
by Parent with the SEC in connection with the transactions contemplated by this
Agreement (the "Parent Disclosure Documents"), including, without limitation,
(i) the Form TO/A, (ii) the Exchange Form TO, (iii) the Exchange Form S-4 and
(iv) the Merger Form S-4 (as defined in Section 9.01) to be filed with the SEC
in connection with the Offer, the Exchange Offer or the Merger and any
amendments or supplements thereto will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act except
that no representation or warranty is made hereby with respect to any
information furnished to Parent by the Company in writing specifically for
inclusion in the Company Disclosure Documents.
(b) At the time the Form TO/A, the Exchange Form TO, the Exchange Form S-4
and the Merger Form S-4 or any amendment or supplement thereto is first mailed
to stockholders of the Company, and, with respect to the Exchange Form S-4 and
the Merger Form S-4 only, at the time such Form S-4 is declared effective by
the SEC, the Form TO/A, the Exchange Form TO, the Exchange Form S-4 and the
Merger Form S-4, as supplemented or amended, if applicable, will not contain
any untrue statement of a material fact or omit to state any material fact
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necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Parent Disclosure Document other than the Exchange Form S-4 or
the Merger Form S-4 and at the time of any distribution thereof, such Parent
Disclosure Document will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section
6.09(b) will not apply to statements or omissions included in the Parent
Disclosure Documents based upon information furnished to Parent in writing by
the Company specifically for use therein.
(c) Neither the information with respect to Parent or any Parent Subsidiary
that Parent furnishes in writing to the Company specifically for use in the
Company Disclosure Documents nor the information incorporated by reference from
documents filed by Parent with the SEC will, at the time of the provision
thereof to Parent or at the time of the filing thereof by Parent with the SEC,
as the case may be, and at the time of the meeting of the Company's
stockholders, if any, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.
Section 6.10. ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule
6.10 hereto or the Parent 10-K since the Parent Balance Sheet Date, Parent and
the Parent Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of circumstances or
facts which has had or reasonably could be expected to have a Parent
Material Adverse Effect;
(b) any declaration (other than a quarterly dividend consistent with past
practices), setting aside or payment of any dividend or other distribution
with respect to any shares of capital stock of Parent, or any repurchase,
redemption or other acquisition by Parent or any Parent Subsidiary of any
outstanding shares of capital stock or other securities of, or other
ownership interests in, Parent or any Parent Subsidiary (other than pursuant
to Parent's previously announced repurchase program);
(c) any amendment of any material term of any outstanding security of
Parent or any Parent Subsidiary that could reasonably be expected to be
materially adverse to Parent;
(d) any creation or assumption by the Parent or any Parent Subsidiary of
any material Lien on any material asset other than in the ordinary course of
business consistent with past practices;
(e) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Parent or any
Parent Subsidiary which, individually or in the aggregate, has had or would
reasonably be expected to have a Parent Material Adverse Effect;
(f) any change in any method of accounting or accounting practice by
Parent or any Parent Subsidiary, except for any such change required by
reason of a concurrent change in generally accepted accounting principles;
(g) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to
organize any employees of Parent or any Parent Subsidiary, which employees
were not subject to a collective bargaining agreement at the Balance Sheet
Date, or any lockouts, strikes, slowdowns, work stoppages or threats thereof
by or with respect to such employees which have had or could reasonably be
expected to have a Parent Material Adverse Effect; or
(h) any cancellation of any licenses, sublicenses, franchises, permits or
agreements to which the Parent or any Parent Subsidiary is a party, or any
notification to Parent or any Parent Subsidiary that any party to any such
arrangements intends to cancel or not renew such arrangements beyond its
expiration date as in effect on the date hereof, which cancellation or
notification, individually or in the aggregate, has had or reasonably could
be expected to have a Parent Material Adverse Effect.
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Section 6.11. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set forth in
the Parent 10-K, there are no liabilities, commitments or obligations of the
Parent or any of its subsidiaries of any kind whatsoever whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances that would reasonably be
likely to result in such a liability commitment or obligation, other than:
(a) liabilities, commitments or obligations disclosed or provided for in
the Parent Balance Sheet or in the Parent 10-K;
(b) liabilities, commitments or obligations incurred in the ordinary
course of business consistent with past practice since the Parent Balance
Sheet Date;
(c) liabilities, commitments or obligations under this Agreement; and
(d) liabilities, commitments or obligations that individually or in the
aggregate have not had and are not reasonably likely to have a Parent
Material Adverse Effect.
Section 6.12. ADEQUATE FUNDS. Parent will have as of the time of acceptance
for payment and purchase of shares of Company Common Stock pursuant to the
Offer sufficient funds for the purchase of all shares of Company Common Stock
that Parent or Merger Co. becomes obligated to accept for payment pursuant to
the Offer and to consummate the transactions contemplated by this Agreement.
Section 6.13. OWNERSHIP OF COMPANY COMMON STOCK. As of the date of this
Agreement, Parent owns 574,200 shares of Company Common Stock.
Section 6.14. FINDERS' FEES. Except for Merrill Lynch & Co., whose fees will
be paid by Parent, there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission from the Company or
any of its affiliates upon consummation of the transactions contemplated by
this Agreement.
Section 6.15. COMPLIANCE OF LAWS. Except as disclosed in the Parent 10-K,
neither Parent nor any Parent Subsidiary is in violation of, or has since
January 1, 1999 violated, and to the knowledge of Parent, is under
investigation with respect to or has been threatened to be charged with or
given notice of any violation of, any applicable law, rule, regulation,
judgment, injunction, order or decree, except for violations that have not had
and would not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect.
ARTICLE 7
COVENANTS OF THE COMPANY
Section 7.01. CONDUCT OF THE COMPANY. From the date hereof until the Control
Date, except as contemplated by this Agreement, the Company and the
Subsidiaries shall conduct their business in the ordinary course consistent
with past practice and shall use their reasonable best efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and employees. Without
limiting the generality of the foregoing, except as set forth in Schedule 7.01,
from the date hereof until the Control Date and unless consented to in writing
by Parent, the Company will not and will cause its Subsidiaries not to:
(a) adopt or propose any change in its certificate of incorporation or
bylaws;
(b) except pursuant to existing agreements or arrangements, or as
specifically permitted by this Agreement:
(i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof for an amount in excess of $5 million in the aggregate,
or sell, lease or otherwise dispose of a subsidiary or an amount of
assets or securities for an amount in excess of $20 million in the
aggregate;
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(ii) make any investment in an amount in excess of $20 million in the
aggregate whether by purchase of stock or securities, contributions to
capital or any property transfer, or purchase for an amount in excess of
$20 million in the aggregate, any property or assets of any other
individual or entity;
(iii) other than in the ordinary course of business consistent with
past practice, waive, release, grant, or transfer any rights of material
value;
(iv) other than in the ordinary course of business consistent with
past practice, modify or change in any material respect any existing
material license, lease, contract, or other document;
(v) incur, assume or prepay an amount of long-term or short-term debt
in excess of $150 million in the aggregate (net of cash and marketable
securities);
(vi) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person (other than any Subsidiary) which, are
in excess of $5 million in the aggregate;
(vii) make any loans, advances or capital contributions to, or
investments in, any other person which are in excess of $20 million in
the aggregate; or
(viii) make any new capital expenditures which, individually or in
the aggregate, would exceed $200 million in the first six months of the
2001 calendar year.
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock except regular quarterly dividends, other than cash dividends
and distributions by a wholly owned subsidiary of the Company to the Company
or to a subsidiary all of the capital stock of which is owned directly or
indirectly by the Company, or, other than consistent with its past practice
of acquiring shares of Company Common Stock to meet its obligation to
reserve and issue shares of Company Common Stock under any stock option or
compensation plan or arrangement of the Company, redeem, repurchase or
otherwise acquire or offer to redeem, repurchase, or otherwise acquire any
of its securities or any securities of its Subsidiaries;
(d) except as specifically permitted by this Agreement, adopt or amend
any material bonus, profit sharing, compensation, severance, termination,
stock option, pension, retirement, deferred compensation, employment or
employee benefit plan, agreement, trust, plan, fund or other arrangement for
the benefit and welfare of any director, officer or employee, or (except for
normal increases in the ordinary course of business that are consistent with
past practices and that, in the aggregate, do not result in a material
increase in benefits or compensation expense to the Company) increase in any
manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options or stock
appreciation rights or the removal of existing restrictions in any benefit
plans or agreements);
(e) except as set forth in Schedule 7.01, pay, discharge or satisfy any
material claims, liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business, consistent
with past practices, of liabilities reflected or reserved against in the
consolidated financial statements of the Company or incurred in the ordinary
course of business, consistent with past practices;
(f) except as set forth in Schedule 7.01, approve any new labor
agreements;
(g) take any action other than in the ordinary course of business and
consistent with past practices with respect to accounting policies or
procedures;
(h) agree or commit to do any of the foregoing; or
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(i) knowingly take or agree or commit to take any action that would make
any representation and warranty of the Company hereunder inaccurate in any
material respect at, or as of any time prior to, the Effective Time.
Section 7.02. STOCKHOLDER MEETING. The Company shall cause a meeting of its
stockholders (the "Company Stockholder Meeting") to be duly called and held
after the purchase of and payment for the shares of Company Common Stock
pursuant to the Offer for the purpose of voting on the approval and adoption of
this Agreement and the Merger, if such meeting is required. Subject to Section
7.04, the Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders and
shall not withdraw such recommendation.
Section 7.03. ACCESS TO INFORMATION. From the date hereof until the
Effective Time, the Company will (a) give Parent and its counsel, financial
advisors, auditors and other authorized representatives (collectively, the
"Representatives") reasonable access during normal business hours to the
offices, properties, books and records of the Company and the Subsidiaries, (b)
provide the Representatives reasonable access to and the right to consult with
representatives of the Company handling any labor negotiations with any union
representing employees of the Company, (c) furnish to Parent and the
Representatives such financial and operating data and other information as such
Persons may reasonably request in order to complete the transactions
contemplated hereby and (d) instruct the Company's employees, counsel and
financial advisors to cooperate with Parent in its investigation of the
business of the Company and the Subsidiaries; PROVIDED that (i) any information
provided to Parent or the Representatives pursuant to this Section shall be
subject to the Confidentiality Agreements and (ii) Parent shall inform the
Representatives receiving such information of the terms of the Confidentiality
Agreements and shall be responsible for any breach by such Representatives of
such Confidentiality Agreements; and PROVIDED FURTHER that no investigation
pursuant to this Section shall affect any representation or warranty given by
the Company to Parent hereunder.
Section 7.04. OTHER OFFERS. (a) Neither the Company nor any of its
Subsidiaries shall (whether directly or indirectly through advisors, agents or
other intermediaries), nor shall the Company or any of its Subsidiaries
authorize or permit any of its or their officers, directors, agents,
representatives, advisors or Subsidiaries to (x) solicit, initiate or take any
action to facilitate or encourage the submission of inquiries, proposals or
offers from any Person (as defined below) (other than Parent) relating to any
Acquisition Proposal, 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 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 the Company or any of its
Subsidiaries; PROVIDED, HOWEVER, that, prior to the acceptance for payment of
shares of Company Common Stock pursuant to the Offer representing together with
shares of Company Common Stock already owned by Parent at least 50.1% of the
shares of Company Common Stock outstanding, the foregoing shall not prohibit
the Company (either directly or indirectly through advisors, agents or other
intermediaries) from (i) furnishing information pursuant to a confidentiality
letter deemed appropriate by the Special Committee (a copy of which shall be
provided for informational purposes only to Parent) concerning the Company and
its businesses, properties or assets to a Person who in the judgment of the
Special Committee has made a bona fide Acquisition Proposal, (ii) engaging in
discussions or negotiations with such a Person who in the judgment of the
Special Committee has made a bona fide Acquisition Proposal, (iii) following
receipt of a bona fide Acquisition Proposal, taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) under the Exchange Act or
otherwise making disclosure to its stockholders, (iv) following receipt of an
Acquisition Proposal, failing to make or withdrawing or modifying its
recommendation referred to in Section 7.02 and/or (v) taking any
non-appealable, final action ordered to be taken by the Company by any court of
competent jurisdiction but in each case referred to in the foregoing clauses
(i), (ii) and (iv) only if (i) the Company has complied with the terms of this
Section 7.04, (ii) the Company has received an unsolicited Acquisition Proposal
which the Special Committee determines in good faith is reasonably likely to
result in a Superior Proposal, and (iii) the Company shall have delivered to
Parent a prior written notice advising Parent that it intends to take such
action. The Company will immediately cease and cause its advisors, agents and
other intermediaries to cease any and all existing activities, discussions
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or negotiations with any parties conducted heretofore with respect to any of
the foregoing. For purposes of this Section 7.04, the term "Person" means any
person, corporation, entity or "group," as defined in Section 13(d) of the
Exchange Act, other than Parent or any of its affiliates.
"ACQUISITION PROPOSAL" means any offer or proposal for a merger,
reorganization, consolidation, share exchange, business combination or other
similar transaction involving the Company 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 the Company, or a
substantial portion of the assets of the Company and its Subsidiaries taken
as a whole, other than the Offer and the Merger contemplated by this
Agreement.
"SUPERIOR PROPOSAL" means any bona fide written Acquisition Proposal
which (i) the Special Committee determines 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) is (a)
more favorable to the Company and its stockholders from a financial point of
view than the transaction contemplated hereunder, 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 Board of
Directors of the Company, reasonably capable of being financed by the Person
making such Acquisition Proposal.
(b) If this Agreement is terminated under circumstances which would
constitute a Payment Event (as defined below), the Company will pay to Parent,
(i) if pursuant to clause (x) in the definition of "Payment Event",
simultaneously with the occurrence of such Payment Event or, if pursuant to
clause (y) in the definition of "Payment Event", within two business days
following such Payment Event, a fee of $15,000,000 and (ii) a reimbursement
payment of the amount advanced to the Company by Parent in order to pay the
amount described in the penultimate sentence of Section 5.04 in cash, together
with interest thereon, at a rate equal to the London Interbank Offered Rate
plus .75%, from the date hereof to the date such payment is due pursuant to
this Agreement (collectively, the "Reimbursement Payment"), reflecting
reimbursement of the amounts advanced by Parent to the Company on the date
hereof and used by the Company to pay the termination fee and the out-of-pocket
fees and expenses owed to Rawhide Holdings Corporation under the Rawhide Merger
Agreement (which advance will be evidenced by a note that, in the event of
termination of this Agreement, will be repaid only on the terms set forth in
this Section 7.04(b) with respect to the Reimbursement Payment, and that will
survive the consummation of the Merger if the Merger is completed). Any payment
of the Reimbursement Payment pursuant to this Section 7.04(b) shall be made
within one business day after termination of this Agreement. Any payment of the
Reimbursement Payment shall be made by wire transfer of immediately available
funds.
"PAYMENT EVENT" means (x) the termination of this Agreement by the
Company or Parent pursuant to Sections 11.01(d) or (e); or (y) the
termination of this Agreement pursuant to Sections 11.01(b), (f) or (h) if
at the time of such termination (or, in the case of a termination pursuant
to Section 11.01(h), at the time of the stockholders meeting), there shall
have been outstanding an Acquisition Proposal pursuant to which stockholders
of the Company would receive cash, securities or other consideration having
an aggregate value in excess of the Per Share of Company Common Stock
Amount, and within six months of any such termination described in clause
(y) above the Company enters into a definitive agreement for or consummates
such Acquisition Proposal or another Acquisition Proposal with a higher per
share of Company Common Stock value than such Acquisition Proposal.
(c) Upon the termination of this Agreement under circumstances which would
constitute a Payment Event, the Company shall reimburse Parent and its
affiliates not later than two business days after demand delivered by Parent to
the Company, the amount of $7,500,000 representing Parent's fees and expenses
(including, without limitation, the fees and expenses of their counsel and
investment banking fees) and Parent shall not be required to submit
documentation substantiating such fees and expenses.
(d) The Company acknowledges that the agreements contained in this Section
7.04 are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, neither Parent nor
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Merger Co. would enter into this Agreement; accordingly, if the Company fails
to promptly pay any amount due pursuant to this Section 7.04, and, in order to
obtain such payment, the other party commences a suit which results in a
judgment against the Company for the fee or fees and expenses set forth in this
Section 7.04, the Company shall also pay to Parent its costs and expenses
incurred in connection with such litigation.
(e) This Section 7.04 shall survive any termination of this Agreement,
however caused, except a termination pursuant to Sections 11.01(a) or (c).
Section 7.05. NOTICES OF CERTAIN EVENTS. The Company shall promptly notify
Parent of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement;
(c) any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting the Company or any Subsidiary which, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 5.12 or which relate to the consummation of
the transactions contemplated by this Agreement.
Section 7.06. TAX MATTERS. (a) Except as set forth in Schedule 7.06 or as
required by law or as is in the ordinary course of business consistent with
past practice or as would not have a Material Adverse Effect, without the prior
written consent of Parent (such consent not to be unreasonably withheld),
neither the Company nor any of its Subsidiaries shall make or change any
material Tax election, change any annual Tax accounting period, adopt or change
any method of Tax accounting, file any amended Returns or claims for Tax
refunds, enter into any closing agreement, surrender any Tax claim, audit or
assessment, surrender any right to claim a Tax refund, offset or other
reduction in Tax liability surrendered, consent to any extension or waiver of
the limitations period applicable to any Tax claim or assessment or take or
omit to take any other action, if any such election, action or omission would
have the effect of increasing the Tax liability or reducing any Tax asset of
the Company or any of its Subsidiaries.
(b) The Company and each of its Subsidiaries will establish or cause to be
established in accordance with GAAP on or before the Effective Time an adequate
accrual for all Taxes due with respect to any Pre-Closing Tax Period or
applicable portion of the Straddle Period.
(c) Neither the Company nor any of its Subsidiaries shall take any action
that would reasonably be likely to prevent the Offer, the Exchange Offer and
the Merger, taken together, from qualifying as a reorganization within the
meaning of Section 368(a) of the Code ("368(a) Reorganization") and prior to
the Effective Time, the Company and its Subsidiaries shall use their reasonable
best efforts to cause the Offer, the Exchange Offer and the Merger, taken
together, to qualify as a 368(a) Reorganization. The Company shall use its
reasonable best efforts to cause Wachtell, Lipton, Rosen & Katz to provide an
opinion, on the basis of certain facts, representations and assumptions set
forth in such opinion, dated the Effective Time, to the effect that the Offer,
the Exchange Offer and the Merger, taken together, will be treated for federal
income tax purposes as a 368(a) Reorganization and that each of Parent, Merger
Co. and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code. The Company shall use its reasonable best efforts
to provide to Wachtell, Lipton, Rosen & Katz and Milbank, Tweed, Hadley &
McCloy LLP a certificate containing representations reasonably requested by
such counsel in connection with the opinions to be delivered pursuant to this
Section 7.06(c) and Section 8.10 hereof.
Section 7.07. AFFILIATES. At least 30 days prior to the Effective Time, the
Company shall deliver to Parent a letter identifying all known Persons who may
be deemed affiliates of the Company for the purposes of Rule 145 of the
Securities Act. The Company shall use reasonable best efforts to obtain a
written agreement from each Person who may be so deemed as soon as practicable
and, in any event, prior to the Effective Time, substantially in the form of
Exhibit A hereto.
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Section 7.08. CONFIDENTIALITY. The confidentiality agreements dated December
4, 2000 and December 18, 2000 between Parent and the Company (the
"Confidentiality Agreements") shall continue in full force and effect prior to
the Effective Time and after any termination of this Agreement.
Section 7.09. OTHER ACTIONS. The Company shall not, and shall not permit any
of its Subsidiaries to, take any action that would, or that would reasonably be
expected to, result in any of the conditions set forth in Article 10 not being
satisfied.
ARTICLE 8
COVENANTS OF PARENT
Parent agrees that:
Section 8.01. PARENT STOCKHOLDER MEETING. Parent shall cause a meeting of
its stockholders (the "Parent Stockholder Meeting") to be duly called and held
as soon as reasonably practicable for the purpose of voting on the issuance of
Parent Common Stock in the Exchange Offer, the Merger and pursuant to Parent
Options after the Merger. The Board of Directors of Parent shall recommend
approval of the issuance of Parent Common Stock in the Exchange Offer and the
Merger pursuant to this Agreement and shall not withdraw such recommendation.
Section 8.02. CONFIDENTIALITY. The Confidentiality Agreements shall continue
in full force and effect prior to the Effective Time and after any termination
of this Agreement.
Section 8.03. VOTING OF SHARES. Each of Parent and Merger Co. agrees to
vote, and to cause any of their subsidiaries to vote, all shares of Company
Common Stock beneficially owned by them in favor of adoption of this Agreement
at the Company Stockholder Meeting.
Section 8.04. DIRECTOR AND OFFICER LIABILITY. For six years after the
Effective Time, Parent will cause the Surviving Corporation to indemnify and
hold harmless the present and former officers and directors of the Company in
respect of acts or omissions occurring prior to the Effective Time to the
extent provided under the Company's articles of incorporation and bylaws in
effect on the date hereof; PROVIDED that such indemnification shall be subject
to any limitation imposed from time to time under applicable law. For six years
after the Effective Time, Parent will 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 Person currently covered by the Company'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 hereof, PROVIDED that
if the aggregate annual premiums for such insurance at any time during such
period shall exceed 200% of the per annum rate of premium paid by the Company
in its last full fiscal year for such insurance, then Parent shall cause the
Surviving Corporation to provide only such coverage as shall then be available
at an annual premium equal to 200% of such rate.
Section 8.05. EMPLOYEE MATTERS. Parent agrees that, subject to applicable
law, the Surviving Corporation and its Subsidiaries will provide benefits to
its employees which will, in the aggregate, be comparable to those currently
provided by Parent and its Subsidiaries to their employees; PROVIDED, HOWEVER,
that this Section 8.05 shall not apply to any employees represented for
purposes of collective bargaining. Notwithstanding the foregoing, nothing
herein shall otherwise limit the Surviving Corporation's right to amend, modify
or terminate any Employee Plan.
Section 8.06. OBLIGATIONS OF MERGER CO. Parent will take all action
necessary to cause Merger Co. to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
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Section 8.07. NYSE LISTING. Parent shall use its reasonable best efforts to
cause the shares of Parent 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.
Section 8.08. ACQUISITIONS OF SHARES. Neither Parent nor Merger Co. will
acquire any shares of Company Common Stock prior to the Effective Time or the
termination of this Agreement, other than shares of Company Common Stock
purchased pursuant to the Offer or the Exchange Offer.
Section 8.09. NOTICES OF CERTAIN EVENTS. Parent shall promptly notify the
Company of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement;
(c) any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting Parent or any of its subsidiaries which
relate to the consummation of the transactions contemplated by this
Agreement.
Section 8.10. REORGANIZATION MATTERS. Neither Parent nor any Parent
Subsidiary shall take any action that would reasonably be likely to prevent the
Offer, the Exchange Offer and the Merger, taken together, from qualifying as a
368(a) Reorganization and prior to the Effective Time, Parent and the Parent
Subsidiaries shall use their reasonable best efforts to cause the Offer, the
Exchange Offer and the Merger, taken together, to qualify as a 368(a)
Reorganization. Parent shall use its reasonable best efforts to cause Milbank,
Tweed, Hadley & McCloy LLP to provide an opinion, on the basis of certain
facts, representations and assumptions set forth in such opinion, dated the
Effective Time, to the effect that the Offer, the Exchange Offer and the
Merger, taken together, will be treated for federal income tax purposes as a
368(a) Reorganization and that each of Parent, Merger Co. and the Company will
be a party to the reorganization within the meaning of Section 368(b) of the
Code. Parent shall use its reasonable best efforts to provide to Wachtell,
Lipton, Rosen & Katz and Milbank, Tweed, Hadley & McCloy LLP a certificate
containing representations reasonably requested by such counsel in connection
with the opinions to be delivered pursuant to Section 7.06(c) hereof and this
Section 8.10.
Section 8.11. INFORMATION RELATING TO OFFER. Parent shall, and shall use its
reasonable best efforts to cause any depository or agent effecting the Offer,
to provide to the Company promptly as requested from time to time by the
Company current information regarding the status of the Offer and the Exchange
Offer and the number of shares tendered and not validly withdrawn.
Section 8.12. CONDUCT OF PARENT. From the date hereof until the Effective
Time, Parent and its subsidiaries shall conduct their business in the ordinary
course consistent with past practice and shall use their reasonable best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees.
Section 8.13. VOTING AGREEMENT. Contemporaneous with the execution hereof,
Parent shall cause to be delivered by Tyson Limited Partnership a voting
agreement in the form attached hereto as Exhibit B.
Section 8.14. OTHER ACTIONS. Parent shall not, and shall not permit any
Parent Subsidiary to, take any action that would, or that would reasonably be
expected to, result in any of the conditions set forth in Article 10 not being
satisfied.
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ARTICLE 9
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
Section 9.01. COMPANY PROXY STATEMENT AND MERGER FORM S-4. If Merger Co.
does not own at least 90% of the issued and outstanding Company Common Stock
following the Offer and the Exchange Offer, the Company shall promptly prepare
the Company Proxy Statement and Parent shall promptly prepare and file with the
SEC the Registration Statement on Form S-4, for shares of Parent Common Stock
to be issued in the Merger, containing information required by Regulation S-K
under the Exchange Act (the "Merger Form S-4"), in which the Company Proxy
Statement will be included. The Company, Parent and Merger Co. shall cooperate
with each other in the preparation of the Merger Form S-4 and any amendment or
supplement thereto, and each shall notify the other of the receipt of any
comments of the SEC with respect to the Merger Form S-4 and of any requests by
the SEC for any amendment or supplement thereto or for additional information,
and shall provide to the other promptly copies of all correspondence between
Parent or the Company, as the case may be, or any of its Representatives and
the SEC with respect to the Merger Form S-4. Parent shall give the Company and
its counsel the opportunity to review the Merger Form S-4 and all responses to
requests for additional information by and replies to comments of the SEC
before their being filed with, or sent to, the SEC. Each of the Company, Parent
and Merger Co. agrees to use its best efforts, after consultation with the
other parties hereto, to respond promptly to all such comments of and requests
by the SEC. Each of the Company, Parent and Merger Co. shall use its reasonable
best efforts to cause the Merger Form S-4 to be declared effective by the SEC
as promptly as practicable. Parent shall promptly take any action (other than
qualifying as a foreign corporation or taking any action which would subject it
to service of process in any jurisdiction where Parent is not now so qualified
or subject) required to be taken under foreign or state securities or Blue Sky
laws in connection with the issuance of Parent Common Stock in the Merger. As
promptly as practicable after the Merger Form S-4 shall have become effective,
Parent and the Company shall fully cooperate with each other to cause the Proxy
Statement/Prospectus contained in the Merger Form S-4 to be mailed to
stockholders of the Company and Parent. Parent will advise Company, promptly
after it receives notice thereof, of (i) the time when the Merger Form S-4
becomes effective, (ii) the issuance of any stop order with respect to the
Merger Form S-4, (iii) the suspension of the qualification of Parent Common
Stock for offering or sale in any jurisdiction, or (iv) any request by the SEC
for an amendment of the Merger Form S-4 or comments thereon and responses
thereto or requests by the SEC for additional information.
Section 9.02. CERTAIN REGULATORY ISSUES. Subject to the terms and conditions
of this Agreement, each party will 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 this Agreement. Subject to Section
7.04, each party shall also refrain from taking, directly or indirectly, any
action contrary to or inconsistent with the provisions of this Agreement,
including action which would interfere with the Offer or impair such party's
ability to consummate the Merger and the other transactions contemplated
hereby. Without limiting the foregoing, the Company and its Board of Directors
shall use their reasonable best efforts to (a) take all action necessary so
that no state takeover statute or similar statute or regulation is or becomes
applicable to the Offer, Exchange Offer, the Merger or any of the other
transactions contemplated by this Agreement and (b) if any state takeover
statute or similar statute or regulation becomes 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 this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Offer, the Exchange Offer, the Merger and the other transactions
contemplated by this Agreement. Parent shall take actions as may be necessary
to eliminate any impediment under any antitrust, competition or trade
regulation laws that may 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, Parent shall agree to divest,
hold separate, or agree to any conduct restrictions with respect to any Parent
or Company assets or as may be required by any
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governmental entity in order to forego that governmental entity bringing any
action to enjoin the Offer, the Exchange Offer or the Merger.
Section 9.03. CERTAIN FILINGS. (a) The Company and Parent shall use their
respective reasonable best efforts to take or cause to be taken, (i) all
actions necessary, proper or advisable by such party with respect to the prompt
preparation and filing with the SEC of the Company Disclosure Documents and the
Parent Disclosure Documents, and (ii) such actions as may be required to have
the Company Proxy Statement cleared and the Merger Form S-4 declared effective
by the SEC, in each case as promptly as practicable.
(b) The Company and Parent shall cooperate with one another (i) in
determining whether any action by or in respect of, or filing with, any
governmental body, agency or official, or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with or as a result of the
consummation of the transactions contemplated by this Agreement and (ii) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Disclosure Documents and Parent Disclosure Documents and seeking timely
to obtain any such actions, consents, approvals or waivers.
Section 9.04. PUBLIC ANNOUNCEMENTS. Parent and the Company will consult with
each other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby and, except
for any press release or public statement as may be required by applicable law
or any listing agreement with any national securities exchange, will not issue
any such press release or make any such public statement prior to such
consultation.
Section 9.05. FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Parent, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Parent, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.
ARTICLE 10
CONDITIONS TO THE MERGER
Section 10.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations
of the Company, Parent and Merger Co. to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) this Agreement shall have been adopted by the stockholders of the
Company and the issuance of Parent Common Stock in the Merger shall have
been approved by the stockholders of Parent, each in accordance with
Delaware Law;
(b) any applicable waiting period under the HSR Act relating to the Offer
and the Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit or restrain the consummation of
the Merger; PROVIDED, HOWEVER, that the Company and Parent shall each use
its reasonable efforts to have any such judgment, order, decree or
injunction vacated;
(d) the Merger Form S-4 shall have been declared effective, no stop order
suspending the effectiveness of the Merger Form S-4 shall be in effect and
no proceedings for such purpose shall be pending before the SEC; and
(e) the shares of Parent Common Stock to be issued in the Merger shall
have been approved for listing in the NYSE, subject to official notice of
issuance.
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Section 10.02. CONDITIONS TO THE OBLIGATION OF THE COMPANY. The obligation
of the Company to consummate the Merger is subject to Merger Co. having
purchased pursuant to the Offer shares of Company Common Stock representing,
together with shares of Company Common Stock previously owned by Parent, no
less than 50.1% of the issued and outstanding shares of Company Common Stock.
ARTICLE 11
TERMINATION
Section 11.01. TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time (notwithstanding any approval of this Agreement by the
stockholders of the Company):
(a) by mutual written consent of the Company and Parent;
(b) (i) by the Company, if the Offer has not been consummated by February
28, 2001, provided that the Company is not then in breach in any material
respect of any of its obligations under this Agreement; or (ii) by either
the Company or Parent (but in case of Parent, only if no shares of Company
Common Stock were purchased by Merger Co. pursuant to the Offer) if the
Merger has not been consummated by May 31, 2001, provided that the party
seeking to exercise such right is not then in breach in any material respect
of any of its obligations under the Agreement;
(c) by either the Company or Parent, if there shall be any law or
regulation that makes acceptance for payment of, and payment for, the shares
of Company Common Stock pursuant to the Offer, or consummation of the Merger
illegal or otherwise prohibited or any judgment, injunction, order or decree
enjoining Merger Co. from accepting for payment of, and paying for, the
shares of Company Common Stock pursuant to the Offer, or Parent, Merger Co.
or the Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable;
(d) by Parent, prior to the purchase of the shares of Company Common
Stock pursuant to the Offer, (i) if the Board of Directors of the Company
shall have withdrawn, or modified or amended in a manner adverse to Parent,
its approval or recommendation of this Agreement, the Offer, the Exchange
Offer or the Merger or its recommendation that stockholders of the Company
tender their shares of Company Common Stock pursuant to the Offer and the
Exchange Offer, adopt and approve this 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 shares of
Company Common Stock) or, (ii) if the Company has failed to call the Company
Stockholder Meeting or failed to mail the Company Proxy Statement to its
stockholders within 20 days after the Merger Form S-4 is declared effective
by the SEC or failed to include in such statement the recommendation
referred to above;
(e) by the Company, if (i) the Board of Directors of the Company
authorizes the Company, subject to complying with the terms of this
Agreement, to enter in to a binding written agreement concerning a
transaction that constitutes a Superior Proposal and the Company notifies
Parent in writing at least three business days prior to the proposed
effectiveness of such termination that it intends to enter into such an
agreement, attaching a description of the material terms and conditions
thereof and permits Parent, within such three business day period to submit
a new offer, which shall be considered by the Special Committee in good
faith (it being understood that the Company shall not enter into any such
binding agreement during such three business day period) and (ii) the
Company prior to such termination pursuant to this clause (e) pays to Parent
in immediately available funds the fees required to be paid pursuant to
Section 7.04. The Company agrees to notify Parent promptly if its intention
to enter into a written agreement referred to in its notification shall
change at anytime after giving such notification;
(f) by Parent, prior to the acceptance for payment of the shares of
Company Common Stock under the Offer, if there has been a breach by the
Company of any representation, warranty, covenant or agreement
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contained in this Agreement that is not curable and such breach would give
rise to a failure of the condition set forth in (d) or (e) of Annex I
hereof;
(g) by the Company, prior to the acceptance for payment of the shares of
Company Common Stock under the Offer, if there has been a breach by Parent
of any representation, warranty, covenant or agreement contained in this
Agreement that is not curable and such breach would give rise to a failure
of the condition set forth in (d) or (e) of Annex I hereof (which, for
purposes of this Section 11.01(g) only shall apply MUTATIS MUTANDIS to
Parent); or
(h) by either the Company or Parent if, at a duly held stockholders
meeting of the Company or any adjournment thereof at which this Agreement
and the Merger are voted upon, the requisite stockholder adoption and
approval shall not have been obtained; PROVIDED, HOWEVER, that Parent shall
not have the right to terminate this Agreement or abandon the transactions
contemplated hereby pursuant to this Section 11.01(h) if shares of Company
Common Stock were purchased pursuant to the Offer.
The party desiring to terminate this Agreement pursuant to Sections
11.01(b)-11.01(h) shall give written notice of such termination to the other
party in accordance with Section 12.01.
Section 11.02. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 11.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except that termination of
this Agreement shall be without prejudice to any rights any party may have
hereunder against any other party for breach of this Agreement; PROVIDED that,
in the event of any such termination, no party shall under any circumstances
have any monetary liability to any other party based upon a breach of any
representation or warranty contained herein. The agreements contained in
Sections 7.04, 7.08, 8.02, 11.02, 11.03, 12.04 and 12.06 shall survive the
termination hereof.
Section 11.03. PARENT PAYMENT EVENT. If a Parent Payment Event (defined
below) occurs, Parent shall pay to the Company a fee of $70 million
simultaneously with the occurrence of such Parent Payment Event. "Parent
Payment Event" means the termination of this Agreement (i) by Parent or the
Company pursuant to Section 11.01(c) or (ii) by the Company pursuant to Section
11.01(b) if the inability to close results from the failure of the conditions
set forth in clause (a) of Annex I hereto, PROVIDED, HOWEVER, that, in each
case, such termination results from any laws, regulation, judgment, injunction,
order or decree with respect to any antitrust, competition or trade regulation
laws that may be asserted by any governmental entity with respect to the Offer,
the Exchange Offer or the Merger.
ARTICLE 12
MISCELLANEOUS
Section 12.01. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
if to Parent or Merger Co., to:
John Tyson, Chairman of the Board,
President and Chief Executive Officer
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762
Telecopy: 501-290-4028
with a copy to:
Les Baledge, Esq.
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762
Telecopy: 501-290-4028
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and with an additional copy to:
Mel M. Immergut, Esq.
Lawrence Lederman, Esq.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005
Telecopy: 212-530-5219
if to the Company, to:
Robert L. Peterson, Chairman of the Board and Chief Executive
Officer, and JoAnn R. Smith, Chairperson of the Special
Committee, c/o IBP, inc.
800 Stevens Port Drive
Dakota Dunes, South Dakota 57049
Telecopy: 605-235-2427
with a copy to:
Sheila B. Hagen, Esq.
c/o IBP, inc.
800 Stevens Port Drive
Dakota Dunes, South Dakota 57049
Telecopy: 605-235-2427
and with an additional copy to:
Richard D. Katcher, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: 212-403-2222
or such other address or telecopy number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified in this
Section and the appropriate telecopy confirmation is received or (b) if given
by any other means, when delivered at the address specified in this Section.
Section 12.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time except for the representations, warranties and agreements set
forth in Sections 7.04, 7.06(c), 8.04, 8.05, 8.10, 11.03, 12.04 and 12.06.
Section 12.03. AMENDMENTS; NO WAIVERS; DIRECTION OF MERGER. (a) Any
provision of this Agreement may be amended or waived prior to the Effective
Time if, and only if, such amendment or waiver is in writing and signed, in the
case of an amendment, by each party to this Agreement or in the case of a
waiver, by the party against whom the waiver is to be effective; PROVIDED that
after the adoption of this Agreement by the stockholders of the Company, no
such amendment or waiver shall, without the further approval of such
stockholders, alter or change (i) the amount or kind of consideration to be
received in exchange for any shares of capital stock of the Company or (ii) any
of the terms or conditions of this Agreement if such alteration or change would
adversely affect the rights of the holders of any shares of capital stock of
the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
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(c) If the Company and Parent so agree at any time prior to the Effective
Time, the Merger shall be effected such that Merger Co. will be merged with and
into the Company with the Company as the "Surviving Corporation" for all
purposes hereunder. In such event, the parties hereto shall execute an
appropriate amendment to this Agreement to reflect the foregoing.
Section 12.04. EXPENSES. Except as provided in Section 7.04, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
Section 12.05. SUCCESSORS AND ASSIGNS; BENEFIT. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, PROVIDED that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Parent
and Merger Co. may make such an asignment to one or more of their affiliates.
Nothing in this Agreement, expressed or implied, shall confer on any Person
other than the parties hereto, and their respective successors and assigns, any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except that the present and former officers and directors of the
Company shall have the rights set forth in Section 8.04 hereof.
Section 12.06. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of New York, except that,
insofar as the procedures of the Merger that are subject to Delaware Law
because the Parent, Merger Co. and the Company are incorporated in Delaware are
concerned, the law of the State of Delaware shall apply.
Section 12.07. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have
received counterparts hereof signed by all of the other parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
IBP, INC.
By: /S/ JO ANN R. SMITH
---------------------------------------------------
Name: Jo Ann R. Smith
Title: Chairperson of the Special Committee,
on behalf of the Special Committee
TYSON FOODS, INC.
By: /S/ JOHN TYSON
------------------------------------------------------
Name: John Tyson
Title: Chairman, President & CEO
LASSO ACQUISITION CORPORATION
By: /S/ JOHN TYSON
---------------------------------------------------------
Name: John Tyson
Title: President
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ANNEX I
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex I shall have the meanings ascribed
to them in the Agreement and Plan of Merger to which it is attached, except
that the term "Merger Agreement" shall be deemed to refer to such Agreement and
Plan of Merger.
Notwithstanding any other provision of the Offer, Merger Co. shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Merger Co.'s obligation to pay for or return tendered shares of
Company Common Stock promptly after termination or withdrawal of the Offer),
pay for, and may (subject to any such rule or regulation) delay the acceptance
for payment of any tendered shares of Company Common Stock, and may (except as
provided in the Merger Agreement) amend or terminate the Offer as to any shares
of Company Common Stock not then paid for, if (i) the condition that shares of
Company Common Stock representing at least the Minimum Condition shall have
been validly tendered and not properly withdrawn prior to the expiration of the
Offer shall not have been satisfied, (ii) any applicable waiting period under
the HSR Act shall not have expired or terminated prior to the expiration of the
Offer or (iii) at any time on or after the date of the Merger Agreement and
before the time of payment for any such shares of Company Common Stock (whether
or not any shares of Company Common Stock have theretofore been accepted for
payment or paid for pursuant to the Offer), any of the following events shall
have occurred and remain in effect other than as a result of any action or
inaction of Parent or any of its Subsidiaries that constitutes a breach of this
Agreement:
(a) there shall have been any law or order promulgated, entered,
enforced, enacted, issued or deemed applicable to the Offer or the Merger by
any court of competent jurisdiction or other competent governmental or
regulatory authority which, directly or indirectly, (1) prohibits, or
imposes any material limitations on, Parent's or Merger Co.'s ownership or
operation (or that of any of their respective subsidiaries or affiliates) of
any portion of their or the Company's businesses or assets which is material
to the business of all such entities taken as a whole, or compels Parent or
Merger Co. (or their respective subsidiaries or affiliates) to dispose of or
hold separate any portion of their or the Company's business or assets which
is material to the business of all such entities taken as a whole, (2)
prohibits, restrains or makes illegal the acceptance for payment, payment
for or purchase of shares of Company Common Stock pursuant to the Offer or
the consummation of the Merger, (3) imposes material limitations on the
ability of Merger Co. or Parent (or any of their respective subsidiaries or
affiliates) effectively to acquire or to hold or to exercise full rights of
ownership of the shares of Company Common Stock purchased pursuant to the
Offer including, without limitation, the right to vote such shares of
Company Common Stock on all matters properly presented to the Company's
stockholders, (4) imposes material limitations on the ability of Merger Co.
or Parent (or any of their respective subsidiaries or affiliates)
effectively to control in any material respect any material portion of the
business or assets of the Company and the Subsidiaries taken as a whole, or
(5) otherwise materially adversely affects the Company and the Subsidiaries
taken as a whole; PROVIDED, HOWEVER, that actions or inactions agreed to be
taken or not taken by Parent and Merger Co. in the Merger Agreement
(including, without limitation, the agreements in Section 9.02 of the Merger
Agreement) shall not be deemed to be a satisfaction of the conditions set
forth in this clause (a);
(b) there shall have occurred (1) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange for a
period in excess of 24 hours (excluding suspensions of limitations resulting
solely from physical damage or interference with such exchange not related
to market conditions or suspensions or limitations triggered by price
fluctuations on a trading day), (2) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States (whether
or not mandatory), (3) any limitation (whether or not mandatory) by any
United States governmental or regulatory authority on the extension of
credit by banks or other financial institutions, or (4) in the case of any
of the foregoing existing at the time of the execution of the Merger
Agreement, a material acceleration or worsening thereof;
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(c) except as disclosed in Schedule 5.10 of the Merger Agreement or in
the Company SEC Reports filed prior to the date of the execution of the
Merger Agreement, since such date, there shall have been any change, event
or development having, or that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company
and the Subsidiaries taken as a whole;
(d) except as affected by actions specifically permitted by this
Agreement, the representations and warranties of the Company contained in
this Agreement (x) that are qualified by materiality or Material Adverse
Effect shall not be true at and as of the scheduled expiration of the Offer
as if made at and as of such time (except in respect of representations and
warranties made as of a specified date which shall not be true as of such
specified date), and (y) that are not qualified by materiality or Material
Adverse Effect shall not be true in all material respects at and as of the
scheduled expiration date of the Offer as if made at and as of such time
(except in respect of representations and warranties made as of a specific
date which shall not be true in all material respects as of such specified
date);
(e) the Company shall not have performed and complied with, in all
material respects, each agreement and covenant required by the Merger
Agreement to be performed or complied with by it with such exceptions as
would not in the aggregate have a Material Adverse Effect;
(f) the Merger Agreement shall have been terminated in accordance with
its terms; or
(g) Parent, Merger Co. and the Company shall have agreed that Merger Co.
shall amend the Offer to terminate the Offer or postpone the payment for
shares of Company Common Stock thereunder; which in the reasonable good
faith judgment of Parent and Merger Co., in any such case, and regardless of
the circumstances makes it inadvisable to proceed with the Offer or with
such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Merger Co.,
may be asserted by Parent and Merger Co. regardless of the circumstances giving
rise to any such condition and, subject to the terms and conditions of the
Merger Agreement, may be waived by Parent and Merger Co., in whole or in part
at any time and from time to time in the sole discretion of Parent and Merger
Co. The failure by Parent and Merger Co. at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
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ANNEX II
CONDITIONS TO THE EXCHANGE OFFER
The capitalized terms used in this Annex II shall have the meanings ascribed
to them in the Agreement and Plan of Merger to which it is attached, except
that the term "Merger Agreement" shall be deemed to refer to such Agreement and
Plan of Merger.
Notwithstanding any other provision of the Exchange Offer, Merger Co. shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Merger Co.'s obligation to pay for or return tendered shares of
Company Common Stock promptly after termination or withdrawal of the Exchange
Offer), pay for, and may (subject to any such rule or regulation) delay the
acceptance for payment of any tendered shares of Company Common Stock, and may
(except as provided in the Merger Agreement) amend or terminate the Exchange
Offer as to any shares of Company Common Stock not then paid for, if (i) at
least five business days have not elapsed since Merger Co. accepted for payment
and paid for a number of shares of Company Common Stock pursuant to the Offer
representing, together with shares of Company Common Stock previously owned by
Parent, at least 50.1% of the issued and outstanding shares of Company Common
Stock and delivered shares of Company Common Stock not accepted for payment in
the Offer to the Depositary under the Exchange Offer or (ii) at any time on or
after the date of the Merger Agreement and before the time of payment for any
such shares of Company Common Stock (whether or not any shares of Company
Common Stock have theretofore been accepted for payment or paid for pursuant to
the Exchange Offer), any of the following events shall have occurred and remain
in effect other than as a result of any action or inaction of Parent or any
Parent Subsidiary that constitutes a breach of this Agreement:
(a) there shall have been any law or order promulgated, entered,
enforced, enacted, issued or deemed applicable to the Exchange Offer by any
court of competent jurisdiction or other competent governmental or
regulatory authority which, directly or indirectly, (1) prohibits, or
imposes any material limitations on, Parent's or Merger Co.'s ownership or
operation (or that of any of their respective subsidiaries or affiliates) of
any portion of their or the Company's businesses or assets which is material
to the business of all such entities taken as a whole, or compels Parent or
Merger Co. (or their respective subsidiaries or affiliates) to dispose of or
hold separate any portion of their or the Company's business or assets which
is material to the business of all such entities taken as a whole, (2)
prohibits, restrains or makes illegal the acceptance for payment, payment
for or purchase of shares of Company Common Stock pursuant to the Exchange
Offer or the consummation of the Merger, (3) imposes material limitations on
the ability of Merger Co. or Parent (or any of their respective subsidiaries
or affiliates) effectively to acquire or to hold or to exercise full rights
of ownership of the shares of Company Common Stock purchased pursuant to the
Exchange Offer including, without limitation, the right to vote such shares
of Company Common Stock on all matters properly presented to the Company's
stockholders, (4) imposes material limitations on the ability of Merger Co.
or Parent (or any of their respective subsidiaries or affiliates)
effectively to control in any material respect any material portion of the
business or assets of the Company and the Subsidiaries taken as a whole, or
(5) otherwise materially adversely affects the Company and the Subsidiaries
taken as a whole; PROVIDED, HOWEVER, that actions or inactions agreed to be
taken or not taken by Parent and Merger Co. in the Merger Agreement
(including, without limitation, the agreements in Section 9.02 of the Merger
Agreement) shall not be deemed to be a satisfaction of the conditions set
forth in this clause (a);
(b) the issuance of Parent Common Stock in the Exchange Offer and the
Merger shall not have been approved by the stockholders of Parent, in
accordance with Delaware Law;
(c) the shares of Parent Common Stock to be issued in the Exchange Offer
and the Merger shall not have been approved for listing on the NYSE, subject
to official notice of issuance;
(d) the Merger Agreement shall have been terminated in accordance with
its terms;
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(e) Parent, Merger Co. and the Company shall have agreed that Merger Co.
shall amend the Exchange Offer to terminate the Exchange Offer or postpone
the payment for shares of Company Common Stock thereunder; or
(f) the Exchange Form S-4 shall not have been declared effective by the
SEC or the SEC has suspended effectiveness of, or issued a stop order with
respect to, the Exchange Form S-4 which suspension or stop order has not
been lifted;
which in the reasonable good faith judgment of Parent and Merger Co., in any
such case, and regardless of the circumstances makes it inadvisable to proceed
with the Exchange Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Merger Co.,
may be asserted by Parent and Merger Co. regardless of the circumstances giving
rise to any such condition and, subject to the terms and conditions of the
Merger Agreement, may be waived by Parent and Merger Co., in whole or in part
at any time and from time to time in the sole discretion of Parent and Merger
Co. The failure by Parent and Merger Co. at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
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ANNEX III
TERMINATED TENDER OFFER/CASH ELECTION MERGER
In accordance with Section 3.06 of the Agreement, in the event of a
Terminated Tender Offer, the Agreement shall be amended as follows:
Section 1. The table of definitions is amended to insert the following
defined terms in correct alphabetical order:
TERM SECTION
---- -------
Allocation Date..... 3.03(b)
Cash Consideration.. 3.02(c)
Cash Election....... 3.03(a)
Cash Election Shares 3.02(c)
Cash Fraction....... 3.02(d)
Dissenting Shares... 3.02(e)
Election Deadline... 3.03(a)
Election Form....... 3.03(a)
Exchange Agent...... 3.03(a)
No-Election Shares.. 3.03(a)
Stock Consideration. 3.02(c)
Stock Election...... 3.03(a)
Stock Fraction...... 3.02(d)
Section 2. Clause (c) of Section 3.02 of the Agreement shall be amended and
restated in its entirety as follows:
(c) holders of Company Common Stock (other than Parent, Merger Co. and
holders who properly perfect appraisal rights under Section 262 of the
Delaware Law) outstanding immediately prior to the Effective Time shall have
the right to elect to receive from Parent for each share of Company Common
Stock either (i) $30.00 in cash (the "Cash Consideration") (such shares for
which such election is made to be referred to as the "Cash Election
Shares"), (ii) a number of shares (such shares for which such election is
made to be referred to as the "Stock Election Shares") of Parent Common
Stock (the "Stock Consideration") equal to the Exchange Ratio (as defined
below) or (iii) a combination of both. For purposes of this Section 3.02(c),
"Exchange Ratio" shall mean a number equal to:
(i) If the Average Parent Common Stock Price is equal to or greater
than $15.40, the Exchange Ratio shall be 1.948 shares of Parent Common
Stock;
(ii) If the Average Parent Common Stock Price is less than $15.40 and
greater than $12.60, the Exchange Ratio shall be determined by dividing
$30.00 by the Average Parent Common Stock Price; and
(iii) If the Average Parent Common Stock Price is equal to or less
than $12.60 the Exchange Ratio shall be 2.381 shares of Parent Common
Stock.
For purposes of this Section 3.02, "Average Parent Common Stock Price" means
the average of the closing price per share of Parent Common Stock on the New
York Stock Exchange, Inc. (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. For purposes of this Agreement, Cash Consideration, Stock
Consideration and any combination of the both shall be collectively referred to
herein as "Merger Consideration".
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Section 3. New clauses (d) and (e) shall be inserted in Section 3.02 of the
Agreement which states as follows:
(d) (i) In the event that holders of shares of Company Common Stock who
hold, in the aggregate, a number of shares of Company Common Stock which
represents, together with shares of Company Common Stock owned by Parent and
Dissenting Shares, if any, more than 50.1% of the issued and outstanding
shares of Company Common Stock, have made a Cash Election (as defined in
Section 3.03(a)), then (A) each Cash Election Share shall be converted into
the right to receive (1) an amount equal to the Cash Consideration
multiplied by a fraction the numerator of which shall be 50.1% and the
denominator of which shall be the sum of (x) the percentage of outstanding
shares of Company Common Stock owned by Parent, (y) the percentage of
outstanding shares of Company Common Stock which are Dissenting Shares and
(z) the percentage of outstanding shares of Company Common Stock making a
Cash Election (such fraction, the "Cash Fraction") and (2) a number of
shares of Parent Common Stock equal to the Stock Consideration multiplied by
a fraction equal to 1 minus the Cash Fraction and (B) all No Election Shares
and Stock Election Shares shall be converted into the right to receive the
Stock Consideration. (ii) In the event that holders of shares of Company
Common Stock who hold more than 49.9% of the issued and outstanding shares
of Company Common Stock have made a Stock Election (as defined in Section
3.03(a)), then (A) each Stock Election Share shall be converted into the
right to receive (1) a number of shares of Parent Common Stock equal to the
Stock Consideration multiplied by a fraction the numerator of which shall be
49.9% and the denominator of which shall be the percentage of outstanding
shares of Company Common Stock making a Stock Election (such fraction, the
"Stock Fraction") and (2) an amount in cash equal to the Cash Consideration
multiplied by a fraction equal to 1 minus the Stock Fraction and (B) all No
Election Shares and Cash Election Shares shall be converted into the right
to receive the Cash Consideration. (iii) In the event neither of the
foregoing clauses (i) or (ii) is applicable, each holder of shares of
Company Common Stock that elects to receive Parent Common Stock will receive
the Stock Consideration in the Merger and each holder of shares of Company
Common Stock that elects to receive cash will receive the Cash Consideration
in the Merger and each No Election Share, if any, shall be converted into
the right to receive in the Merger (1) a number of shares of Parent Common
Stock equal to the Stock Consideration multiplied by a fraction the
numerator of which shall equal the difference between (x) 49.9% and the
Stock Fraction and the denominator of which shall equal the percentage of
outstanding shares of Company Common Stock which are No Election Shares and
(2) an amount in cash equal to the Cash Consideration multiplied by a
fraction the numerator of which shall equal the difference between (x) 50.1%
and (y) the Cash Fraction and the denominator of which shall equal the
percentage of outstanding shares of Company Common Stock which are No
Election Shares.
(e) Notwithstanding Section 3.02, shares of Company Common Stock which
are issued and outstanding immediately prior to the Effective Time and which
are held by a holder who has not voted such shares of Company Common Stock
in favor of the Merger, who shall have delivered a written demand for
appraisal of such Shares in the manner provided by the Delaware Law and who,
as of the Effective Time, shall not have effectively withdrawn or lost such
right to appraisal (the "Dissenting Shares") shall not be converted into a
right to receive the Merger Consideration. The holders thereof shall be
entitled only to such rights as are granted by Section 262 of the Delaware
Law. Each holder of Dissenting Shares who becomes entitled to payment for
such shares of Company Common Stock pursuant to Section 262 of the Delaware
Law shall receive payment therefor from the Surviving Corporation in
accordance with the Delaware Law; PROVIDED, HOWEVER, that (i) if any such
holder of Dissenting Shares shall have failed to establish his entitlement
to appraisal rights as provided in Section 262 of the Delaware Law, (ii) if
any such holder of Dissenting Shares shall have effectively withdrawn his
demand for appraisal of such shares of Company Common Stock or lost his
right to appraisal and payment for his shares of Company Common Stock under
Section 262 of the Delaware Law or (iii) if neither any holder of Dissenting
Shares nor the Surviving Corporation shall have filed a petition demanding a
determination of the value of all Dissenting Shares within the time provided
in Section 262 of the Delaware Law, such holder shall forfeit the right to
appraisal of such shares of Company Common Stock and each such share shall
be treated as if it had been converted, as of the Effective Time, into a
right to receive the Merger Consideration, without interest thereon, from
the
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Surviving Corporation as provided in Section 3.02 hereof. The Company shall
give Parent prompt notice of any demands received by the Company for
appraisal of shares of Company Common Stock, and Parent shall have the right
to participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any
such demands.
Section 4. Section 3.03 of the Agreement shall be amended as follows: (i)
clause (a) shall be amended and restated in its entirety as stated below; (ii)
new clauses (b) and (c) shall be inserted as stated below; and
(iii) current clauses (b), (c), (d) and (e) shall be renamed (d), (e), (f) and
(g), respectively.
(a) Prior to the Effective Time, Parent shall appoint an agent reasonably
acceptable to the Company (the "Exchange Agent") for the purpose of
exchanging certificates representing shares of Company Common Stock for the
Merger Consideration. Parent shall cause Merger Co. to make available to the
Exchange Agent, as soon as reasonably practicable as of or after the
Effective Time, the Merger Consideration to be delivered in respect of the
shares of Company Common Stock. At the time of the mailing of the Proxy
Statement/Prospectus provided for in Section 9.01, Parent will cause the
Exchange Agent to send to each holder of shares of Company Common Stock on
the record date for the meeting of stockholders of the Company a letter of
transmittal and cash election form (collectively, the "Election Form") and
other appropriate materials providing for such holder, subject to the
provisions of Section 3.02(d), (i) to elect to receive the Stock
Consideration with respect to all or any portion of such holder's shares of
Company Common Stock ("Stock Election") or (ii) to elect to receive the Cash
Consideration with respect to all or any portion of such holder's shares of
Company Common Stock ("Cash Election"). As of the Election Deadline (as
hereinafter defined), any shares of Company Common Stock (other than
Dissenting Shares and shares owned by Parent) with respect to which there
shall not have been made any election by submission to the Exchange Agent of
an effective, properly completed Election Form shall be deemed to be
"No-Election Shares".
(i) Any election to receive the Cash Consideration or the Stock
Consideration shall have been validly made only if the Exchange Agent shall
have received by 5:00 p.m., New York City time, on the business day
preceding the meeting of stockholders of the Company provided for in Section
7.02 (the "Election Deadline"), an Election Form properly completed. An
election by a holder of shares of Company Common Stock shall be validly made
only if the Exchange Agent shall have received an Election Form properly
completed and executed (with the signature or signatures thereon guaranteed
if required by the Election Form) by such holder of shares of Company Common
Stock. Parent shall have the right to make reasonable determinations and to
establish reasonable procedures (not inconsistent with the terms of this
Agreement) in guiding the Exchange Agent in its determination as to the
validity of Election Forms and of any revision, revocation or withdrawal
thereof.
(ii) Two or more holders of shares of Company Common Stock who are
determined to constructively own such shares owned by each other by virtue
of Section 318(a) of the Code and who so certify to Parent's satisfaction,
and any single holder of shares of Company Common Stock who holds such
shares in two or more different names and who so certifies to Parent's
satisfaction, may submit a joint Election Form covering the aggregate shares
of Company Common Stock owned by all such holders or by such single holder,
as the case may be. For all purposes of this Agreement, each such group of
holders which, and each such single holder who, submits a joint Election
Form shall be treated as a single holder of shares of Company Common Stock.
(iii) Record holders of shares of Company Common Stock who are nominees
only may submit a separate Election Form for each beneficial owner for whom
such record holder is a nominee; PROVIDED, HOWEVER, that at the request of
Parent, such record holder shall certify to the satisfaction of Parent that
such record holder holds such shares as nominee for the beneficial owner
thereof. For purposes of this Agreement, each beneficial owner for which an
Election Form is submitted will be treated as a separate holder of shares of
Company Common Stock subject, however, to the immediately preceding
paragraph (ii) dealing with joint Election Forms.
A-46
(iv) Any holder of shares of Company Common Stock who has made an
election by submitting an Election Form to the Exchange Agent may at any
time prior to the Election Deadline change such holder's election by
submitting a revised Election Form, properly completed and signed, that is
received by the Exchange Agent prior to the Election Deadline. Any holder of
shares of Company Common Stock may at any time prior to the Election
Deadline revoke such holder's election by written notice to the Exchange
Agent received at any time prior to the Election Deadline.
(b) As soon as practicable after the Election Deadline (the "Allocation
Date"), the Exchange Agent shall effectuate the allocation among holders of
shares of Company Common Stock of rights to receive the Stock Consideration
or the Cash Consideration in the Merger in accordance with the terms of this
Section 3.03(b). As is more fully set forth above, the number of shares of
Company Common Stock to be converted in the Merger into the right to receive
cash may not exceed a number of shares of Company Common Stock which,
together with shares of Company Common Stock owned by Parent and Dissenting
Shares, exceeds 50.1% of the outstanding shares of Company Common Stock. The
number of shares of Company Common Stock to be converted in the Merger into
the Stock Consideration shall not exceed 49.9% of the total number of
outstanding shares of Company Common Stock. The Exchange Agent shall
determine the percentages of the Cash Election Shares, the Stock Election
Shares and the No Election Shares.
(c) No certificates or scrip for fractional shares of Parent Common Stock
will be issued, no Parent stock split or dividend shall relate to any
fractional share interest, and no such fractional share interest shall
entitle the owner thereof to vote or to any rights of or as a stockholder of
Parent. In lieu of such fractional shares, any holder of Company Common
Stock who would otherwise be entitled to a fraction of a share of Parent
Common Stock (or any other person who is the record holder of certificates
for shares of Parent Common Stock into which such shares of Company Common
Stock have been converted) will, upon surrender of his certificate or
certificates, be paid the cash value of such fraction (without interest and
rounded to the nearest cent), which shall be equal to the fraction
multiplied by the Average Parent Common Stock Price, which shall be deemed
to represent the market value of a full share of Parent Common Stock.
Section 5. Clause (a) of Section 3.04 of the Agreement shall be amended and
restated in its entirety as follows:
(a) At or immediately prior to the Effective Time, each employee stock
option or director stock option to purchase shares of Company Common Stock
outstanding under any Company stock option plans, whether or not vested or
exercisable (each, a "Company Option") shall, by virtue of the Merger and
without any further action on the part of any holder thereof, be assumed by
Parent and deemed to constitute an option (each, a "Parent Option") to
acquire, on the same terms and conditions as were applicable under such
Company Option (subject to Section 3.04(b)), the same number of shares of
Parent Common Stock as the holder of such Company Option would have been
entitled to receive pursuant to Section 3.02(c) of this Agreement had such
holder exercised such Company Option in full immediately prior to the
Effective Time (rounded to the nearest whole number) and received only Stock
Consideration in the Merger, at a price per share (rounded down to the
nearest whole cent) equal to (x) the aggregate exercise price for the share
of Company Common Stock otherwise purchasable pursuant to such Company
Option divided by (y) the number of whole shares of Parent Common Stock
purchasable pursuant to the Parent Option in accordance with the foregoing.
The other terms of each such Company Option, and the plans under which they
were issued, shall continue to apply in accordance with their terms.
Section 6. The introduction of Section 7.01 of the Agreement shall be
amended and restated in its entirety as follows (with clauses (a) through (i)
remaining unchanged):
From the date hereof until the Effective Time, except as contemplated in
this Agreement, the Company and the Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use
their reasonable best efforts to preserve intact their business
organizations and relationships with
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third parties and to keep available the services of their present officers
and employees. Without limiting the generality of the foregoing, except as
set forth in Schedule 7.01, from the date hereof until the Effective Time
and unless consented to in writing by Parent, the Company will not and will
cause its Subsidiaries not to:
Section 7. Section 7.02 of the Agreement shall be amended and restated in
its entirety as follows:
Section 7.02. STOCKHOLDER MEETING. The Company shall cause a meeting of
its stockholders (the "Company Stockholder Meeting") to be duly called and
held, as soon as reasonably practicable following the date hereof, for the
purpose of voting on the approval and adoption of this Agreement and the
Merger. Subject to Section 7.04, the Board of Directors of the Company shall
recommend approval and adoption of this Agreement and the Merger by the
Company's stockholders and shall not withdraw such recommendation.
Section 8. In the first proviso of Section 7.04 of the Agreement, the words
"PROVIDED, HOWEVER, that, prior to the acceptance for payment of shares of
Company Common Stock pursuant to the Offer representing together with shares of
Company Common Stock already owned by Parent at least 50.1% of the shares of
Company Common Stock outstanding" shall be deleted and replaced with "PROVIDED,
HOWEVER, that, prior to the Effective Time", and the remainder of such section
shall be unchanged.
Section 9. Section 10.01(b) of the Agreement shall be amended and restated
in its entirety as follows:
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
Section 10. Section 10.02 of the Agreement shall be amended and restated in
its entirety as follows:
Section 10.02. CONDITIONS TO THE OBLIGATION OF THE COMPANY. The
obligation of the Company to consummate the Merger is subject to the
satisfaction of the following further condition:
(a) except as affected by actions specifically permitted by this
Agreement, the representations and warranties of Parent contained in
this Agreement (x) that are qualified by materiality or Parent Material
Adverse Effect shall be true at and as of the Effective Time as if made
at and as of such time (except in respect of representations made as of
a specified date which shall be required to be true as of such specified
date), and (y) that are not qualified by materiality or Parent Material
Adverse Effect shall be true in all material respects at and as of the
Effective Time as if made at and as of such time (except in respect of
representations and warranties made as of a specific date which shall be
true in all material respects as of such specified date); and
(b) Parent shall have performed and complied with each agreement and
covenant required by this Agreement to be performed or complied with by
it with such exceptions as would not in the aggregate have a Parent
Material Adverse Effect.
Section 11. Inserted in the Agreement is a new Section 10.03 which states as
follows:
Section 10.03. CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER CO. The
obligations of Parent and Merger Co. to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) there shall not have been any law or order promulgated, entered,
enforced, enacted, issued or deemed applicable to the Merger by any
court of competent jurisdiction or other competent governmental or
regulatory authority which, directly or indirectly, (1) prohibits, or
imposes any material limitations on, Parent's or Merger Co.'s ownership
or operation (or that of any of their respective subsidiaries or
affiliates) of any portion of their or the Company's businesses or
assets which is material to the business of all such entities taken as a
whole, or compels Parent or Merger Co. (or their respective subsidiaries
or affiliates) to dispose of or hold separate any portion of their or
the Company's business or assets which is material to the business of
all such entities taken as a whole,
A-48
(2) imposes material limitations on the ability of Merger Co. or Parent
(or any of their respective subsidiaries or affiliates) effectively to
control in any material respect any material portion of the business or
assets of the Company and the Subsidiaries taken as a whole, or (3)
otherwise materially adversely affects the Company and the Subsidiaries
taken as a whole; PROVIDED, HOWEVER, that actions or inactions agreed to
be taken or not taken by Parent and Merger Co. in this Agreement
(including, without limitation, the agreements in Section 9.02 of this
Agreement) shall not be deemed to be a satisfaction of the conditions
set forth in this clause (a);
(b) there shall not be in place (1) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock
Exchange for a period in excess of 24 hours (excluding suspensions of
limitations resulting solely from physical damage or interference with
such exchange not related to market conditions or suspensions or
limitations triggered by price fluctuations on a trading day), (2) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3)
any limitation (whether or not mandatory) by any United States
governmental or regulatory authority on the extension of credit by banks
or other financial institutions, or (4) in the case of any of the
foregoing existing at the time of the execution of this Agreement, a
material acceleration or worsening thereof;
(c) except as affected by actions specifically permitted by this
Agreement, the representations and warranties of the Company contained
in this Agreement (x) that are qualified by materiality or Material
Adverse Effect shall be true at and as of the Effective Time as if made
at and as of such time (except in respect of representations made as of
a specified date which shall be required to be true as of such specified
date), and (y) that are not qualified by materiality or Material Adverse
Effect shall be true in all material respects at and as of the Effective
Time as if made at and as of such time (except in respect of
representations and warranties made as of a specific date which shall be
true in all material respects as of such specified date); and
(d) the Company shall have performed and complied with each agreement
and covenant required by this Agreement to be performed or complied with
by it with such exceptions as would not in the aggregate have a Material
Adverse Effect.
A-49
EXHIBIT A
[FORM OF AFFILIATE'S AGREEMENT]
[DATE]
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, Arkansas 72762
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of IBP, inc., a Delaware corporation (the "Company"), as that term
is defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"). Neither my entering into this agreement, nor anything contained herein,
shall be deemed an admission on my part that I am such an "affiliate".
Pursuant to the terms of the Agreement and Plan of Merger dated as of
January , 2001 (the "Merger Agreement"), among Tyson Foods, Inc. a Delaware
corporation ("Parent"), Lasso Acquisition Corporation, a Delaware corporation
("Merger Co."), and the Company providing for the merger of the Company with
and into Merger Co. (the "Merger"), and as a result of the Merger, I may
receive shares of Parent's Class A Common Stock, par value $0.10 per share (the
"Parent Securities"), in exchange for the shares of common stock, par value
$0.05 per share, of the Company owned by me at the Effective Time (as defined
in the Merger Agreement) of the Merger.
I represent and warrant to Parent that in such event:
A. I shall not make any sale, transfer or other disposition of the Parent
Securities in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and discussed
its requirements and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of Parent Securities, to the extent I felt
necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of Parent Securities to me pursuant
to the Merger has been registered with the Commission under the Act on a
Registration Statement on Form S-4. However, I have also been advised that,
since at the time the Merger was submitted for a vote of the stockholders of
the Company I may have been deemed to have been an affiliate of the Company and
a distribution by me of Parent Securities has not been registered under the
Act, the Parent Securities must be held by me indefinitely unless (i) a
distribution of Parent Securities by me has been registered under the Act, (ii)
a sale of Parent Securities by me is made in conformity with the volume and
other limitations of Rule 145 promulgated by the Commission
under the Act or (iii) in the opinion of counsel reasonably acceptable to
Parent, some other exemption from registration is available with respect to a
proposed sale, transfer or other disposition of the Parent Securities by me.
D. I understand that Parent is under no obligation to register the sale,
transfer or other disposition of Parent Securities by me or on my behalf or to
take any other action necessary in order to make compliance with an exemption
from registration available.
A-50
E. I also understand that stop transfer instructions will be given to
Parent's transfer agents with respect to the Parent Securities and that there
will be placed on the certificates for the Parent Securities, or any
substitutions therefor, a legend stating in substance.
"The shares represented by this certificate were issued in a transaction
to which Rule 145 promulgated under the Securities Act of 1933, as amended,
applies."
F. I also understand that unless the transfer by me of my Parent Securities
has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, Parent reserves the right to put the following legend
on the certificates issued to my transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and were acquired from a
person who received such shares in a transaction to which Rule 145
promulgated under such Act applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with, any
distribution thereof within the meaning of such Act and may not be sold,
pledged or otherwise transferred except in accordance with an exemption from
the registration requirements of such Act."
It is understood and agreed that the legends set forth in paragraph E and F
above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to Parent a copy of a letter
from the staff of the Commission, or an opinion of counsel reasonably
acceptable to Parent to the effect that such legend is not required for
purposes of the Act.
Very truly yours,
--------------------------------------
Name:
Accepted this day of
, , by:
TYSON FOODS, INC.
By ____________________________________________________________________________
Name:
Title:
A-51
EXHIBIT B
VOTING AGREEMENT
In consideration of Tyson Foods, Inc., a Delaware corporation ("Parent"),
and Lasso Acquisition Corporation, a Delaware corporation and wholly-owned
subsidiary of Parent ("Merger Co."), entering into on the date hereof an
Agreement and Plan of Merger (the "Merger Agreement") dated as of the date
hereof with IBP, inc., a Delaware corporation (the "Company"), the undersigned
holder (the "Stockholder") of shares of Schedule A Securities (as defined
below) agrees with the Company as follows:
1. During the period (the "Agreement Period") beginning on the date hereof
and ending on the earlier of (i) the date of any substantive amendment to the
Merger Agreement which has not been approved in writing by the Stockholder and
(ii) the date of termination of the Merger Agreement, the Stockholder hereby
agrees to vote all shares of Parent's Class B Common Stock owned by the
Stockholder to approve the issuance of Parent's Class A Common Stock with
respect to the Exchange Offer and the Merger at the Parent Stockholder Meeting
(each as defined in the Merger Agreement), and at any adjournment thereof or
pursuant to action by written consent, at or by which such action is submitted
for the consideration and vote of the stockholders of Parent.
2. The Stockholder hereby represents and warrants to the Company that as of
the date hereof:
(a) The Stockholder (i) owns beneficially all of the shares of Parent's
Class B Common Stock set forth opposite its name in Schedule A hereto (the
"Schedule A Securities"), and no other shares of Parent's Class B Common
Stock, (ii) has the full and unrestricted legal power, authority and right
to enter into, execute and deliver this Voting Agreement without the consent
or approval of any other person and (iii) has not entered into any voting
agreement with or granted any person any proxy (revocable or irrevocable)
with respect to such shares (other than this Voting Agreement).
(b) This Voting Agreement is the valid and binding agreement of the
Stockholder.
(c) No investment banker, broker or finder is entitled to a commission or
fee from the Stockholder or Parent in respect of this Agreement based upon
any arrangement or agreement made by or on behalf of the Stockholder.
3. If any provision of this Voting Agreement shall be invalid or
unenforceable under applicable law, such provision shall be ineffective to the
extent of such invalidity or unenforceability only, without in any way
affecting the remaining provisions of this Voting Agreement.
4. This Voting Agreement may be executed in two or more counterparts each of
which shall be an original with the same effect as if the signatures hereto and
thereto were upon the same instrument.
5. The parties hereto agree that if for any reason any party hereto shall
have failed to perform its obligations under this Voting Agreement, then the
party seeking to enforce this Agreement against such non-performing party shall
be entitled to specific performance and injunctive and other equitable relief,
and the parties hereto further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such-injunctive
or other equitable relief. This provision is without prejudice to any other
rights or remedies, whether at law or in equity, that any party hereto may have
against any other party hereto for any failure to perform its obligations under
this Voting Agreement.
6. This Voting Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
A-52
7. The Stockholder will, upon request, execute and deliver any additional
documents deemed by Parent to be necessary or desirable to complete and
effectuate the covenants contained herein.
8. This Agreement shall terminate upon the termination of the Agreement
Period.
9. The Stockholder hereby agrees that if it sells, transfers, assigns,
encumbers or otherwise disposes (each, a "Transfer") of any Schedule A
Securities (whether to an affiliate or otherwise) during the Agreement Period,
such Stockholder shall require the transferee of such Schedule A Securities to
execute and deliver to the Company a voting agreement identical in form to this
Voting Agreement except for the identity of the Stockholder prior to or
concurrent with the consummation of such Transfer. The Company understands and
acknowledges that, subject to the preceding sentence, the Stockholder is free
to Transfer any Schedule A Securities at such times and in such manner as it
deems appropriate.
10. Nothing in this Agreement, express or implied, shall confer on any
person other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason
of this Agreement.
11. All notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given,
If to the Company, to:
Robert L. Peterson, Chairman of the Board
and Chief Executive Officer,
and JoAnn R. Smith, Chairperson of the Special Committee,
c/o IBP, inc.
800 Stevens Port Drive
Dakota Dunes, South Dakota 57049
Telecopy: (605) 235-2427
with a copy to:
Sheila B. Hagen, Esq.
c/o IBP, inc.
800 Stevens Port Drive
Dakota Dunes, South Dakota 57049
Telecopy: (605) 235-2427
and with an additional copy to:
Richard D. Katcher, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 403-2222
If to the Stockholder:
Don Tyson
Tyson Limited Partnership
2210 West Oaklawn Drive
Springdale, AR 72762-6999
(501) 290-4028
with a copy to:
Les Baledge, Esq.
Tyson Foods, Inc.
2210 West Oaklawn Drive
Springdale, AR 72762-6999
(501) 290-4028
A-53
or such other address or telecopy or telephone number as such party may
hereafter specify for the purpose by notice to the other parties hereto. Each
such notice, request or other communication shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and the appropriate telecopy confirmation is received or (b) if
given by any other means, when delivered at the address specified in this
Section.
IN WITNESS WHEREOF, the parties hereto have executed this Voting Agreement
as of the [ ] day of January, 2001.
IBP, INC.
By:
-----------------------------------
Name:
Title:
TYSON LIMITED PARTNERSHIP
By:
-----------------------------------
Name: Don Tyson
Title: Managing General Partner
A-54
SCHEDULE A
SHARES OF TYSON
STOCKHOLDER CLASS B COMMON STOCK
----------- --------------------
Tyson Limited Partnership 102,598,560
A-55
APPENDIX B
IN THE COURT OF
CHANCERY OF THE STATE OF DELAWARE
IN AND FOR
NEW CASTLE COUNTY
IN RE IBP, INC.
SHAREHOLDERS LITIGATION
IBP, INC.,
DEFENDANT AND CROSS-CLAIM PLAINTIFF, ---|
AND COUNTERCLAIM DEFENDANT. |
|
v. \ CONSOLIDATED
\ CIVIL ACTION NO.
TYSON FOODS, INC. and LASSO / 18373
ACQUISITION CORPORATION, /
|
DEFENDANTS, CROSS-CLAIM DEFENDANTS |
AND COUNTERCLAIM PLAINTIFFS. ---|
STIPULATION AND ORDER
WHEREAS, the Court has today entered an Order, Judgment and Decree in this
action (the "Post-Trial Order"); and
WHEREAS, the undersigned parties and the board of directors of IBP and the
executive committee of the board of directors of Tyson have determined that it
is in the best interests of the parties and their respective shareholders to
resolve certain outstanding issues and disputes among them relating to the
Merger Agreement and the Confidentiality Agreement and to facilitate the
consummation of the transactions contemplated by the Merger Agreement by the
entry of this Stipulation and Order:
IT IS HEREBY STIPULATED, subject to the approval of the Court, as follows:
1. Tyson shall take such steps as are necessary to consummate the
transactions contemplated by the Merger Agreement, as modified (by the
agreement of Tyson and IBP) by Annex A to this Stipulation and Order, at such
times as are specified in Annex A. Tyson's consummation of the transactions
contemplated by Annex A shall be deemed to be compliance with the terms of the
Post-Trial Order. If the tender offer contemplated by Annex A is not
consummated by August 15, 2001 (or by September 1, 2001, if the time for
consummation has been extended to such date pursuant to the terms of paragraph
2 of Annex A) or the merger contemplated by Annex A is not consummated by
November 15, 2001, either IBP or Tyson shall be entitled to move the Court for
an appropriate remedy including, but not limited to, specific performance of
such transactions, or specific performance of the Cash Election Merger provided
for in Section 3.06 and Annex III of the Merger Agreement, and/or damages, and
each party shall be entitled to oppose any such motion on any appropriate
grounds. Nothing herein other than consummation of the transactions
contemplated by Annex A shall be deemed to exculpate Tyson from any liability
for breach of the Merger Agreement under the Court's Memorandum Opinion of June
15, 2001, as subsequently revised in its Opinion of June 18, 2001.
B-1
2. Subject to Tyson's compliance with the terms hereof, IBP agrees not to
seek an award of interest on any portion of the consideration that may have
been required to be paid to IBP shareholders pursuant to the Post-Trial Order
or any adjustment to the financial terms of such consideration on account of
the delay in consummation occasioned by what the Court has determined to be
Tyson's breach of the Merger Agreement. If, however, the tender offer
contemplated by Annex A is not consummated by August 15, 2001 (or by September
1, 2001, if the time for consummation has been extended to such date pursuant
to the terms of paragraph 2 of Annex A) for any reason or the merger
contemplated by Annex A is not consummated by November 15, 2001 for any reason,
IBP shall be entitled to move for an award of interest and/or an adjustment to
the financial terms of the consideration to be paid to IBP shareholders on
account of what the Court has determined to be Tyson's breach, and Tyson shall
be entitled to oppose any such motion on any appropriate grounds. Nothing in
this paragraph 2 shall be deemed to limit or otherwise impair Tyson's right to
move the Court for an appropriate remedy as specified in paragraph 1 above.
3. The Court shall retain exclusive jurisdiction over this action to assure
compliance with the terms of the Post-Trial Order, this Stipulation and Order
and Annex A. Tyson will not seek to vacate, modify or appeal from the
preliminary injunction entered by the Court on May 10, 2001 and will not
commence any action against IBP arising out of or relating to this Stipulation
and Order in any other forum, unless and until the Court determines that Tyson
is not required to consummate the tender offer contemplated by Annex A or IBP
moves for an award of interest, an adjustment to the financial terms of the
consideration to be paid to IBP shareholders and/or damages on account of what
the Court has determined to be Tyson's breach of the Merger Agreement;
provided, however, that nothing herein shall be deemed to be (i) a waiver by
IBP of any of its rights under the forum selection clause of the
Confidentiality Agreement, (ii) a consent by IBP to the lifting or modification
of the Court's preliminary injunction dated May 10, 2001 or to the jurisdiction
of, or propriety of litigating in, any forum other than this Court, (iii) a
waiver by Tyson of any of its rights with respect to the Confidentiality
Agreement or the Court's preliminary injunction, or (iv) a consent by Tyson to
the Court's preliminary injunction. Promptly following consummation of such
tender offer and the acquisition of 50.1% of the outstanding shares of IBP
common stock thereunder, Tyson will take all necessary steps to obtain
dismissal with prejudice of the action entitled TYSON FOODS, INC., ET AL. v.
IBP, INC., ET AL., Case No. E2001-749-4, currently pending in the Chancery
Court of Washington County, Arkansas.
B-2
4. Neither Tyson nor IBP shall move for the entry of a final judgment with
respect to the Post-Trial Order unless and until the Court determines that
Tyson is not required to consummate the tender offer contemplated by Annex A or
IBP moves for an award of interest, an adjustment to the financial terms of the
consideration to be paid to IBP shareholders and/or damages on account of what
the Court has determined to be Tyson's breach of the Merger Agreement.
Dated: June 27, 2001
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP YOUNG CONAWAY STARGATT & TAYLOR, LLP
By: /S/ ANTHONY W. CLARK By: /S/ WILLIAM D. JOHNSTON
---------------------------- ----------------------------
Anthony W. Clark William D. Johnston
One Rodney Square Eleventh Floor, Wilmington Trust Center
P.O. Box 636 1100 North Market Street
Wilmington, Delaware 19899 P.O. Box 391
(302) 651-3000 Wilmington, DE 19899-0391
Attorneys for Defendants, Cross-Claim (302) 571-6600
Defendants and Counterclaim
Plaintiffs Tyson Foods, Inc. OF COUNSEL:
and Lasso Acquisition Corporation
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
(212) 403-1000
Attorneys for Cross-claim Plaintiff and
Counterclaim Defendant IBP,
inc. and Individual Defendants
So ordered this day of 2001:
/S/ LEO E. STRINE, JR.
----------------------------------------
Vice Chancellor
B-3
ANNEX A
1. Tyson shall cause Merger Co. to commence a tender offer (the "New Offer")
as promptly as practicable but in any event within five business days of the
Court's signing of the foregoing Stipulation and Order. The New Offer shall
initially remain open for twenty business days from the date of commencement
thereof. Except as modified by the foregoing Stipulation and Order and this
Annex A thereto, the New Offer shall be made on the same terms and conditions
as contemplated by Section 2.01(a), (e), (f) and (g) and 2.02(b), (d) and (e)
of the Merger Agreement with respect to the Offer.
2. Annex I of the Merger Agreement is hereby modified (other than for
purposes of Section 11.01(g)) to provide that the only conditions to the
obligation of Merger Co. to consummate the New Offer are (v) the Minimum
Condition, (w) the nonoccurrence of the conditions set forth in paragraphs
(a)(2), (f) and (g) of Annex I, (x) the nonoccurrence of the condition set
forth in paragraph (d) of Annex I solely as it relates to the representations
and warranties contained in Sections 5.01, 5.02, 5.03, 5.04 and 5.05 and in the
last sentence of this paragraph (as modified by a disclosure schedule provided
to Tyson on the date hereof), (y) except as heretofore or hereafter consented
to by Tyson, the compliance by the Company with Sections 2.01(e), 2.02(a), (b),
(d) and (e), 7.01, 7.03, 7.05, 7.06, 7.09, 9.02 and 9.03 of the Merger
Agreement (as modified by a disclosure schedule provided to Tyson on the date
hereof), with such exceptions as would not in the aggregate have a Material
Adverse Effect and (z) the condition set forth in the next to last sentence of
this paragraph. Merger Co. may delay the acceptance for payment of any tendered
shares of Company Common Stock only upon the failure to occur of the conditions
specified above; provided that, in no event shall Merger Co. be obligated to
close prior to August 15, 2001 unless prior to such date there is entered an
order approving the settlement of this Consolidated Action in accordance with
the Stipulation and Settlement dated as of June 27, 2001, in which case Merger
Co. shall be obligated to consummate the New Offer as promptly as practicable
after the date of the entry of such order, subject to the immediately
succeeding proviso and assuming the satisfaction of the other conditions to the
consummation of the New Offer and the passage of the minimum offering period
under the Exchange Act, and provided further, that, in no event shall Merger
Co. be obligated to close prior to September 1, 2001 unless prior to such date
Tyson has obtained financing to pay for such tendered shares, in which case
Merger Co. shall be obligated to consummate the New Offer as promptly as
practicable after Tyson has obtained such financing, subject to the immediately
preceding proviso and assuming the satisfaction of the other conditions to the
consummation of the New Offer and the passage of the minimum offering period
under the Exchange Act. Notwithstanding anything herein to the contrary, the
entry of such an order shall be a condition only to Merger Co.'s obligation to
close prior to August 15, 2001 and shall not be a condition to Merger Co.'s
obligation to close on and after August 15, 2001; and the obtaining of such
financing shall be a condition only to Merger Co.'s obligation to close prior
to September 1, 2001 and shall not be a condition to Merger Co.'s obligation to
close on and after September 1, 2001. Merger Co. shall not be obligated to
consummate the New Offer if PricewaterhouseCoopers shall have withdrawn its
opinion with respect to the Company's audited consolidated financial statements
for the year ended December 30, 2000 and shall not have given an opinion (which
is unqualified with respect to the accounting principles used and the
completeness of disclosures made) with respect to an amended or restated
version of such financial statements (it being understood that the fact that
any such amendment or restatement has been made shall not relieve Merger Co. of
its obligation to consummate the New Offer); and any change with respect to
accounting policies or procedures adopted by the Company in order to obtain the
opinion described above shall be deemed consented to by Tyson. The Company's
management is not aware as of the date hereof of any circumstances that would
result in PricewaterhouseCoopers withdrawing its opinion with respect to the
Company's audited consolidated financial statements for the year ended December
30, 2000.
3. Sections 2.01(b), (c), (d) and (h), Section 2.02(c) and Section 2.04 are
hereby deleted as well as any other references to the Exchange Offer in the
Merger Agreement.
4. Section 2.02(a) and Section 2.03 shall remain in full force and effect.
B-4
5. Article 3 (other than Section 3.06 which is hereby deleted) and Article 4
shall remain in full force and effect.
6. Article 5, other than Sections 5.01, 5.02, 5.03, 5.04 and 5.05, is hereby
deleted.
7. Article 6 shall remain in full force and effect.
8. Article 7 shall remain in full force and effect, except that there shall
be substituted for "$15,000,000" in Section 7.04(b)(i) "$59,000,000". Section
7.01(c) shall be deemed to apply mutatis mutandis to Tyson.
9. Article 8 shall remain in full force and effect. Contemporaneously
herewith, Tyson is causing to be delivered by Tyson Limited Partnership (the
"Partnership") a voting agreement in the form attached as Exhibit B to the
Merger Agreement, reaffirming, among other things, that the Partnership will
cause to be voted all of the shares it now owns or has the power to vote to
approve the issuance of Tyson's Class A Common Stock with respect to the
Merger, as modified by the terms of the foregoing Stipulation and Order and
this Annex A thereto.
10. Article 9 shall remain in full force and effect, except that the Company
shall commence preparation of the Company Proxy Statement and Tyson shall
promptly prepare the Merger Form S-4 and they shall cause such documents to be
filed with the SEC as promptly as practicable. The Company Proxy Statement will
be mailed to shareholders of record promptly after the Merger Form S-4 has been
declared effective and shares acquired in the New Offer have been registered in
the name of Tyson or Merger Co. The Company shall provide to the institutions
providing the financing for the New Offer such reasonable and customary
certificates as are necessary with respect to its historical financial
statements in connection with the obtaining of such financing.
11. Article 10 shall remain in full force and effect.
12. Article 11 shall remain in full force and effect except that Section
11.01 shall be modified to change the reference in (b)(i) to August 15, 2001,
and Sections 11.01(b)(ii), (c) and (f) shall be deleted.
13. Article 12 shall remain in full force and effect.
B-5
[LOGO] JPMorgan
APPENDIX C
June 26, 2001
The Board of Directors
IBP, inc.
800 Stevens Port Drive
Dakota Dunes, SD 57049
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of IBP, inc. (the "Company") of the consideration
proposed to be paid to them in connection with the proposed Modified
Transaction (as defined below).
We understand that on December 12, 2000, Tyson Foods, Inc. (the "Buyer") and
its wholly-owned subsidiary Lasso Acquisition Corporation (the "Merger
Subsidiary") commenced a cash tender offer to acquire 50.1% of the outstanding
Common Stock, par value $.05 per share, of the Company (the "IBP Common Stock")
at a purchase price per share of $26.00 (the "Cash Offer"). We further
understand that the Company, the Buyer and the Merger Subsidiary subsequently
entered into an Agreement and Plan of Merger, dated as of January 1, 2001 (the
"Original Agreement"), pursuant to which the Buyer and the Merger Subsidiary
agreed to amend the Cash Offer (the "Amended Cash Offer") to reflect, among
other things, an amended purchase price of $30.00 per share of the IBP Common
Stock to be paid in the Amended Cash Offer (the "Amended Purchase Price").
Pursuant to the Original Agreement, the Buyer and the Merger Subsidiary agreed
to commence an exchange offer (the "Exchange Offer" and together with the
Amended Cash Offer, the "Offers") to acquire the IBP Common Stock which
remained outstanding after the Amended Cash Offer in exchange for that number
of shares of Class A Common Stock, par value $.10 per share, of the Buyer (the
"Class A Common Stock") determined pursuant to the provisions of the Agreement
(the "Exchange Ratio"). Pursuant to the Original Agreement, the Offers were to
be followed by a merger of the Company with and into the Merger Subsidiary (the
"Merger" and together with the Offers, the "Original Transaction") in which the
remaining shares of Common Stock of the Company not tendered or accepted in the
Offers would be converted into the right to receive that number of shares of
the Class A Common Stock equal to the Exchange Ratio.
The Amended Cash Offer was commenced on January 5, 2001. On February 28,
2001, the Buyer terminated the Amended Cash Offer, without any purchase of any
shares of IBP Common Stock thereunder. On or about March 29, 2001, the Buyer
announced, among other things, the "discontinuation" of the transactions
contemplated by the Original Agreement. Litigation between the Company and the
Buyer ensued (the "Litigation"). In an opinion dated June 18, 2001 (the "Court
Opinion"), the Delaware Court of Chancery in and for New Castle County (the
"Court") ruled, among other things, that the Original Agreement was a valid and
enforceable contract that the Buyer had no right to terminate and ruled that an
award of specific performance was appropriate.
The Company and the Buyer propose to enter into a stipulation and order (the
"Stipulation and Order"), subject to approval of the Court, pursuant to which,
among other things, the Buyer will take such steps as are necessary to
consummate the transactions contemplated by the Original Agreement as modified
by the Stipulation and Order, including the commencement of a cash tender offer
(the "Modified Offer") on the terms and conditions of the Amended Cash Offer
and a merger (the "Modified Merger") on the terms and conditions of the Merger,
in each case as modified by the Stipulation and Order.
In arriving at our opinion, we have reviewed (i) the Offer to Purchase dated
December 12, 2000 of the Buyer and the Merger Subsidiary relating to the Cash
Offer; (ii) the Agreement and a draft dated June 26, 2001 of the Stipulation
and Order; (iii) the Schedule 14D-9, as amended, filed by the Company with the
Securities and
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Exchange Commission with respect to the Original Transaction; (iv) certain
publicly available information concerning the businesses of the Company and the
Buyer and of certain other companies in meat processing and branded foods
sector and the reported market prices for such other companies' securities; (v)
publicly available terms of certain transactions involving companies in the
meat processing and branded foods sector and the consideration received for
such companies; (vi) current and historical market prices of the IBP Common
Stock and the Class A Common Stock; (v) publicly available financial
information regarding the Company and the Buyer; (vii) certain internal
financial analyses and forecasts prepared by the Company and its management and
the Buyer and its management, respectively; (viii) the terms of other business
combinations that we deemed relevant; and (ix) the Court Opinion and certain
other information regarding the Litigation that we deemed relevant. We note
that we have not received any financial analyses or forecasts from the Company
or the Buyer since the date of our earlier opinion regarding the Original
Transaction, January 1, 2001.
In addition, we have held discussions with certain members of the management
of the Company and the Buyer with respect to certain aspects of the Original
Transaction and the Modified Transaction, and the past and current business
operations of the Company and the Buyer, the financial condition and future
prospects and operations of the Company and the Buyer, the effects of the
Original Transaction and the Modified Transaction on the financial condition
and future prospects of the Company and the Buyer, and certain other matters we
believed necessary or appropriate to our inquiry. We have performed and
reviewed such other financial studies and analyses and considered such other
information as we deemed appropriate for the purposes of this opinion.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was
publicly available or was furnished to us by the Company or the Buyer or
otherwise reviewed by us, and we have not assumed any responsibility or
liability therefor. We have not conducted any valuation or appraisal of any
assets or liabilities, nor have any such valuations or appraisals been provided
to us. In relying on financial analyses and forecasts provided to us, we have
assumed that they have been reasonably prepared based on assumptions reflecting
the best currently available estimates and judgments by management as to the
expected future results of operations and financial condition of the Company or
the Buyer to which such analyses or forecasts relate and that if we had access
to financial analyses and forecasts prepared as of the date hereof, they would
not differ in any material respects from the financial analyses and forecasts
made available to us by management of the Company and the Buyer. We have also
assumed that the Modified Transaction will have the tax consequences described
in discussions with, and materials furnished to us by, representatives of the
Company, and that the Modified Offer and the Modified Merger and the other
transactions contemplated by the Stipulation and Order will be consummated as
described therein. We have further assumed that the definitive Stipulation and
Order will not differ in any material respects from the draft thereof furnished
to us. We have relied as to all legal matters relevant to rendering our opinion
upon the advice of counsel.
We note that we are familiar with the terms of an alternative merger
transaction with the Company proposed by Smithfield Foods, Inc. concurrently
with the negotiation of the Original Transaction and that we participated in
negotiations with respect to such alternate transaction. We also note that we
are familiar with the circumstances surrounding the Litigation. We have taken
all such facts into account in connection with rendering this opinion.
Our opinion is necessarily based on economic, market and other conditions as
in effect on, and the information made available to us as of, the date hereof.
It should be understood that subsequent developments may affect this opinion
and that we do not have any obligation to update, revise, or reaffirm this
opinion. We are expressing no opinion herein as to the price at which the Class
A Common Stock will trade at any future time.
We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company and to the Board of Directors of the Company,
respectively, with respect to the Original Transaction and Modified Transaction
and will receive a fee from the Company in connection with the closing of the
Modified Transaction. We also acted as financial advisor to the Special
Committee with respect to the proposed merger transaction
C-2
between the Company and Rawhide Holdings Corporation, a Delaware corporation of
which all of the outstanding capital stock is owned by DLJ Merchant Banking
Partners III, L.P. The proposed merger transaction between the Company and
Rawhide was terminated in connection with the Company and the Buyer entering
into the Original Agreement.
Please be advised that we and our affiliates may from time to time perform
certain financial advisory and other commercial and investment banking services
for the Company or the Buyer, for which we receive customary compensation.
Specifically, we and certain of our affiliates may be arranging or providing
financing to the Buyer in connection with the Transaction, for which we would
receive customary compensation. In addition, in the ordinary course of our
businesses, we and our affiliates may actively trade the debt and equity
securities and senior loans of the Company or the Buyer for our own account or
for the accounts of customers and, accordingly, we may at any time hold long or
short positions in such securities or loans.
On the basis of and subject to the foregoing, it is our opinion as of the
date hereof that each of (i) the purchase price to be paid to the Company's
stockholders in the Modified Offer and (ii) the Exchange Ratio in the proposed
Modified Merger is fair, from a financial point of view, to the Company's
stockholders.
This letter is provided to the Board of Directors of the Company in
connection with and for the purposes of its evaluation of the Modified
Transaction. This opinion does not constitute a recommendation to any
stockholder of the Company as to whether such stockholder should tender its
shares of IBP Common Stock in the Modified Offer or how such stockholder should
vote with respect to the Modified Transaction. This opinion may not be
disclosed, referred to, or communicated (in whole or in part) to any third
party for any purpose whatsoever except with our prior written consent in each
instance. This opinion may be reproduced in full in any Schedule TO, Schedule
14D-9, amended offer to purchase, proxy or information statement mailed to
stockholders of the Company but may not otherwise be disclosed publicly in any
manner without our prior written approval and must be treated as confidential.
Very truly yours,
/s/ J.P. MORGAN SECURITIES INC.
--------------------------------------------
J.P. Morgan Securities Inc.
C-3
J.P. MORGAN
APPENDIX D
January 1, 2001
Special Committee of the Board of Directors of IBP, inc.
800 Stevens Port Drive
Dakota Dunes, SD 57049
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of IBP, inc. (the "Company") of the consideration
proposed to be paid to them in connection with the proposed Transaction (as
defined below). We understand that on December 12, 2000, Tyson Foods, Inc. (the
"Buyer") and its wholly-owned subsidiary Lasso Acquisition Corporation (the
"Merger Subsidiary") commenced a cash tender offer to acquire 50.1% of the
outstanding Common Stock, par value $.05 per share, of the Company (the "IBP
Common Stock") at a purchase price per share of $26.00 (the "Cash Offer"). We
further understand that the Company, the Buyer and the Merger Subsidiary have
subsequently entered into an Agreement and Plan of Merger, dated as of January
1, 2001 (the "Agreement"), pursuant to which the Buyer and the Merger
Subsidiary will amend the Cash Offer (the "Amended Cash Offer") to reflect,
among other things, an amended purchase price of $30.00 per share of the IBP
Common Stock to be paid in the Amended Cash Offer (the "Amended Purchase
Price"). Pursuant to the Agreement, the Buyer and the Merger Subsidiary will
commence an exchange offer (the "Exchange Offer" and together with the Amended
Cash Offer, the "Offers") to acquire the IBP Common Stock which remains
outstanding after the Amended Cash Offer in exchange for that number of shares
of Class A Common Stock, par value $.10 per share, of the Buyer (the "Class A
Common Stock") determined pursuant to the provisions of the Agreement (the
"Exchange Ratio"). Pursuant to the Agreement, the Offers will be followed by a
merger of the Company with and into the Merger Subsidiary (the "Merger" and
together with the Offers, the "Transaction") in which the remaining shares of
Common Stock of the Company not tendered or accepted in the Offers will be
converted into the right to receive that number of shares of the Class A Common
Stock equal to the Exchange Ratio.
In arriving at our opinion, we have reviewed (i) the Offer to Purchase dated
December 12, 2000 of the Buyer and the Merger Subsidiary relating to the Cash
Offer; (ii) the Agreement; (iii) certain publicly available information
concerning the businesses of the Company and the Buyer and of certain other
companies in meat processing and branded foods sector and the reported market
prices for such other companies' securities; (iv) publicly available terms of
certain transactions involving companies in the meat processing and branded
foods sector and the consideration received for such companies; (v) current and
historical market prices of the IBP Common Stock and the Class A Common Stock;
(vi) the audited financial statements of the Company for the fiscal year ended
December 31, 1999, the unaudited financial statements of the Company for the
period ended September 30, 2000, the audited financial statements of the Buyer
for the fiscal year ended October 2, 1999, and the unaudited financial
statements of the Company for the period ended July 1, 2000; (vii) certain
internal financial analyses and forecasts prepared by the Company and its
management and the Buyer and its management, respectively; and (viii) the terms
of other business combinations that we deemed relevant.
In addition, we have held discussions with certain members of the management
of the Company and the Buyer with respect to certain aspects of the
Transaction, and the past and current business operations of the Company and
the Buyer, the financial condition and future prospects and operations of the
Company and the Buyer, the effects of the Transaction on the financial
condition and future prospects of the Company and the
D-1
Buyer, and certain other matters we believed necessary or appropriate to our
inquiry. We have reviewed such other financial studies and analyses and
considered such other information as we deemed appropriate for the purposes of
this opinion.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was
publicly available or was furnished to us by the Company or the Buyer or
otherwise reviewed by us, and we have not assumed any responsibility or
liability therefor. We have not conducted any valuation or appraisal of any
assets or liabilities, nor have any such valuations or appraisals been provided
to us. In relying on financial analyses and forecasts provided to us, we have
assumed that they have been reasonably prepared based on assumptions reflecting
the best currently available estimates and judgments by management as to the
expected future results of operations and financial condition of the Company or
the Buyer to which such analyses or forecasts relate. We have also assumed that
the Transaction will have the tax consequences described in discussions with,
and materials furnished to us by, representatives of the Company, and that the
other transactions contemplated by the Agreement will be consummated as
described in the Agreement. We have relied as to all legal matters relevant to
rendering our opinion upon the advice of counsel.
We note that we are familiar with the terms of an alternative merger
transaction with the Company proposed by Smithfield Foods, Inc. concurrently
with the negotiation of the Transaction and that we participated in
negotiations with respect to such alternative transaction. We have taken such
facts into account in rendering this opinion.
Our opinion is necessarily based on economic, market and other conditions as
in effect on, and the information made available to us as of, the date hereof.
It should be understood that subsequent developments may affect this opinion
and that we do not have any obligation to update, revise, or reaffirm this
opinion. We are expressing no opinion herein as to the price at which the Class
A Common Stock will trade at any future time.
We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company with respect to the proposed Transaction and will
receive a fee from the Company for the delivery of this opinion. We also acted
as financial advisor to the Special Committee with respect to the proposed
merger transaction between the Company and Rawhide Holdings Corporation, a
Delaware corporation of which all of the outstanding capital stock is owned by
DLJ Merchant Banking Partners III, L.P., which is proposed to be terminated in
connection with entering into the Agreement.
For your information, our parent company, J.P. Morgan & Co. Incorporated,
recently merged with The Chase Manhattan Corporation to form J.P. Morgan Chase
& Co. ("J.P. Morgan Chase"). Please be advised that affiliates of J.P. Morgan
Chase may from time to time perform certain financial advisory and other
commercial and investment banking services for the Company or the Buyer, for
which they received customary compensation. Specifically, affiliates of J.P.
Morgan Chase may be arranging or providing financing to the Buyer in connection
with the Transaction, for which they would receive customary compensation. In
addition, in the ordinary course of their businesses, affiliates of J.P. Morgan
Chase may actively trade the debt and equity securities and senior loans of the
Company or the Buyer for their own account or for the accounts of customers
and, accordingly, they may at any time hold long or short positions in such
securities or loans.
On the basis of and subject to the foregoing, it is our opinion as of the
date hereof that each of (i) the Amended Purchase Price to be paid to the
Company's stockholders in the Amended Cash Offer and (ii) the Exchange Ratio in
the proposed Exchange Offer and the proposed Merger is fair, from a financial
point of view, to the Company's stockholders.
This letter is provided to the Special Committee of the Board of Directors
of the Company in connection with and for the purposes of its evaluation of the
Transaction. This opinion does not constitute a recommendation to any
stockholder of the Company as to whether such stockholder should tender its
shares of IBP Common Stock in the Offers or how such stockholder should vote
with respect to the Transaction. This opinion may not be
D-2
disclosed, referred to, or communicated (in whole or in part) to any third
party for any purpose whatsoever, except with our prior written consent in each
instance. This opinion may be reproduced in full in any Schedule TO, Schedule
14d-9, amended offer to purchase, proxy or information statement mailed to
stockholders of the Company but may not otherwise be disclosed publicly in any
manner without our prior written approval and must be treated as confidential.
Very truly yours,
/s/ J.P. MORGAN SECURITIES INC.
--------------------------------------
J.P. Morgan Securities Inc.
D-3
APPENDIX E
PETER J. SOLOMON COMPANY 767 FIFTH AVENUE
LIMITED NEW YORK, NEW YORK 10153
January 1, 2001
Special Committee of the Board of Directors IBP, inc.
800 Stevens Port Drive
Dakota Dunes, SD 57049
Ladies and Gentlemen:
We understand that IBP, inc. (the "Company") proposes to enter into an
Agreement and Plan of Merger dated as of January 1, 2001 (the "Agreement") by
and among the Company, Tyson Foods, Inc. ("Parent") and Lasso Acquisition
Corporation ("Merger Sub"), a direct wholly-owned subsidiary of Parent. The
Agreement provides for a tender offer (the "Offer") by Merger Sub to acquire up
to 50.1% of the outstanding shares of the common stock, par value $0.05 per
share, of the Company (the "Company Common Stock"), pursuant to which Merger
Sub will pay $30.00 in cash for each share of Company Common Stock accepted for
payment in the Offer. The Agreement also provides for an exchange offer (the
"Exchange Offer") by Merger Sub to acquire the remaining outstanding shares of
the Company Common Stock, pursuant to which each share of Company Common Stock
would be exchanged for that number of shares of Class A Common Stock, par value
$0.10 per share, of Parent ("Parent Common Stock") having a value of $30.00 per
share, subject to the limitations set forth in the Agreement. The Agreement
further provides that following completion of the Offer and the Exchange Offer,
the Company will be merged with and into Merger Sub (the "Merger" and, together
with the Offer and the Exchange Offer, the "Acquisition") and Merger Sub will
continue as the surviving corporation and a wholly-owned subsidiary of Parent.
Subject to the terms and conditions of the Agreement, in the Merger each then
outstanding share of the Company Common Stock will be converted into and
represent the right to receive that number of shares of Parent Common Stock
having a value of $30.00 per share, subject to the limitations set forth in the
Agreement.
You have asked us to advise you with respect to the fairness to the holders
of the Company Common Stock, from a financial point of view, of the
consideration proposed to be paid to the holders of the Company Common Stock in
the Acquisition pursuant to the terms of the Agreement.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company and Parent, respectively;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management of the
Company;
(iii) reviewed certain financial forecast information for the Company and
Parent furnished to us by the management of the Company and Parent,
respectively;
(iv) discussed the past and current operations and financial condition of
the Company, as well as its business and prospects with management of the
Company;
(v) reviewed the reported prices and trading activity of the Company
Common Stock and the Parent Common Stock;
E-1
(vi) compared the financial performance and condition of the Company and
the Parent and the reported prices and trading activity of the Company
Common Stock and the Parent Common Stock with that of certain other
comparable publicly traded companies and their securities;
(vii) reviewed publicly available information regarding the financial
terms of certain transactions comparable, in whole or in part, to the
Acquisition;
(viii) participated in certain discussions with representatives of the
Company;
(ix) reviewed a draft of the Agreement;
(x) considered the terms proposed by a third party for a merger
transaction with the Company, and the negotiations relating thereto; and
(xi) performed such other analyses and took into account such other
matters as we have deemed appropriate.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to a merger or other business
combination transaction involving the Company or any of its assets.
We have assumed and relied upon the accuracy and completeness of the
information reviewed by us for the purposes of this opinion and we have not
assumed any responsibility for independent verification of such information.
With respect to the financial forecast information, we have assumed that the
financial forecasts were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the future financial performance
of the Company and Parent, respectively. We have further assumed that the final
form of the Agreement will be substantially the same as the last draft reviewed
by us. We have not made any independent valuation or appraisal of the assets or
liabilities of the Company or Parent, nor have we been furnished with any such
valuation or appraisal. We have not assumed any obligation to conduct any
physical inspection of the properties or facilities of the Company or Parent.
Our opinion is necessarily based on economic, market and other conditions as in
effect on, and 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 Acquisition, 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 Merger. For purposes of rendering this opinion we
have assumed, in all aspects material to our analysis, that the representations
and warranties of each party to the Agreement and all related documents are
true and correct, that each party to the Agreement will perform all of the
covenants and agreements required to be performed by such party thereunder and
that all conditions to the consummation of the Merger will be satisfied without
waiver thereof.
We have acted as financial advisor to the Special Committee of the Board of
Directors (the "Special Committee") of the Company in connection with the
transaction contemplated by the Agreement and will receive a fee for our
services.
This letter is for the information and assistance of the Special Committee
in its consideration of the transaction contemplated by the Agreement and does
not constitute a recommendation to any holder of Company Common Stock as to
whether or not such holder should tender any shares of Company Common Stock in
the Offer or the Exchange Offer or how any such holder should vote on the
Merger. This letter may not be disclosed, referred to, or communicated (in
whole or in part) to any third party for any purpose whatsoever except with our
prior written consent in each instance. This letter may be reproduced in full
in any Schedule TO, Schedule 14D-9, amended offer to purchase, proxy or
information statement mailed to stockholders of the Company but may not
otherwise be disclosed publicly in any manner without our prior written
approval and must be treated as confidential.
We are not expressing any opinion herein as to the prices at which the
Company Common Stock or the Parent Common Stock will trade following the
announcement or consummation of the Merger. In addition, the opinion does not
address the Company's underlying business decision to proceed with the
Acquisition.
E-2
Based on, and subject to, the foregoing and other matters as we consider
relevant, we are of the opinion that on the date hereof, the consideration
proposed to be paid to the holders of the Company Common Stock in the
Acquisition, is fair from a financial point of view to the holders of the
Company Common Stock.
Very truly yours,
/s/ PETER J. SOLOMON COMPANY LIMITED
--------------------------------------
Peter J. Solomon Company Limited
E-3