The Hudson Foods saga continues:Hudson to merge with Tyson

On Sept. 4, 1997, Leland Tollett, chairman of the board and CEO for Tyson Foods, Inc., Springdale, AR, and James "Red" Hudson, chairman of the board for Hudson Foods, Inc., Rogers, AR, announced that the two companies have signed a definitive agreement to merge. In the cash and stock transaction, each share of Hudson common stock will be exchanged for $8.40 in cash and 6/10 of a share of Tyson Foods common stock. The transaction is subject to certain conditions, including receipt of applicable regulatory approvals and the approval of Hudson shareholders.

The acquisition is a clear coup for Tyson, which knocks out a leading competitor while satisfying capacity needs. Tyson officials acknowledged their satisfaction with the deal, noting that, as its Arkansas neighbor and number three poultry producer in America, Hudson had long been in its acquisition sights. Tyson's growth from $400-plus million in sales in 1983 to more than $6.5 billion last year has found it on a continuous hunt for poultry rearing and processing capacity. Tyson had invested heavily in poultry processing plants and complexes in recent years. Most of those projects, however, are winding down.

It isn't yet clear what if any role Red Hudson will have in the merged company. But initially, at least, he has declined a spot on the board of directors. Chairman Hudson commented, "The decision to sell was not an easy one, or one that was made precipitously. Tyson Foods has been our neighbor and friend for 25 years now. They have made a very good offer, and the Hudson Foods Board and I have decided that it is in the best interests of our shareholders, associates, growers, and customers to accept. I look forward to a smooth transition and a strong company resulting from the merger that will be able to better serve our people and customers." Tyson's Chairman Tollett added, "Hudson Foods and Tyson are a perfect fit if there ever was one. I have had great respect for Red Hudson and his management team over the years. I am convinced that the combined strength of our two companies will enable us to meet the demands and expectations of all our customers, shareholders, growers, and team members. All these groups will be the ultimate beneficiaries of this merger."

Poultry powerhouse Tyson Foods is the world's largest poultry processor, and growing through acquisition has been an ongoing corporate strategy. The company operates 61 plants worldwide, racking up annual sales of $6.5 billion. Tyson also processes fish products through its Louis Kemp division as well as flour, tortillas, and corn chips. Hudson Foods boasted $1.4 billion in annual sales and 13 production facilities (not counting the Columbus, NE, raw ground beef plant being purchased by IBP, Inc.).

With this purchase, Tyson adds a diverse product line that includes frozen precooked ground beef patties, hot dogs, luncheon meats, pizzas, stuffed potato skins, and poultry products. As one of the nation's leading poultry companies, Hudson Foods has derived more than 70 percent of its $1.4 billion sales in Fiscal Year from chicken (57.2 percent) and turkey (13.2 percent) products. The merger gives Tyson a stranglehold on domestic poultry leadership and additional leverage for export production. It also broadens the company's product portfolio.

At FOOD PLANTS '97, to be held Sept. 14-17 at the Renaissance Orlando Resort, Orlando, FL, Tyson Foods executive vice president for operations, transportation, and warehousing, David Purtle, will speak on the subject of "Low-Cost Expansion Planning." The conference will also feature sessions on "Designing Your Plant for Sanitation" and a pilor FDA HACCP program. Call Food Plant Strategies, Inc. at 708/449-5705; FAX 708/449-5739 for more information.

By: Mike Pehanich