$3.8 billion - that's what a Wall Street investor group is offering to acquire IBP, the world's biggest packer.
The offer by Rawhide Holdings Corp., an affiliate of Wall Street investment giant Donaldson, Lufkin & Jenrette Inc. (DLJ), would provide IBP $2.4 billion in cash and assume $1.4 billion in IBP debt. Accepted by IBP's board of directors, the offer is worth about $22.25/share in cash.
The purchase would give IBP a deep source of capital, which some analysts say would likely be used to produce and promote IBP branded beef items. Earlier this year, IBP launched its Thomas E. Wilson line of 90 beef and 40 pork items sold through the fresh, case-ready program. IBP's earlier-stated goal was to market $1 billion in branded beef items by the end of 2001 and double that by the end of 2002.
Many analysts, however, say the offer is too low, Reuters reports, maintaining that IBP stock is worth closer to $30/share based on expected cash flow and earnings.
Upon its announcement, Sen. Paul Wellstone (D-MN) blasted the proposed deal because of DLJ's financial ties to Archer Daniels Midland, which holds about 12% of IBP stock. Wellstone says the acquisition would create vertical concentration that would squeeze family farmers.
Those same concerns were voiced a few days later by the National Farmers Union in its requests to USDA and the Department of Justice for an anti-trust investigation on the proposed acquisition.
A $42.2 million checkoff budget for fiscal year 2001 has been approved. The budget, which funds programs beginning Oct. 1, includes:
- $25.1 million for promotion efforts, including consumer advertising aimed at mothers and promotional efforts with grocers and restaurants,
- $4.7 million for foreign marketing,
- $4.5 million for research, including funds for projects aimed at improving product safety, product satisfaction and muscle profiling,
- $4.2 million for consumer information aimed at improving the image of beef with doctors, dietitians, food writers and other media,
- $1.9 million for producer communications, and
- $1.8 million for industry information programs aimed at improving the image of the cattle industry and issues management.
A total of 2,140,900 head of fed cattle were committed to the new non-profit marketing association called Consolidated Beef Producers (CBP).
The goal was to gather commitments on 750,000 head from feedyards and feedyard customers in Texas, New Mexico, Kansas and Oklahoma by the Oct. 1 deadline. The aim, says CBP board chairman Paul Hitch of Guymon, OK, is to amass sufficient numbers to precipitate "true value-based negotiated pricing" with packers. Marketing through the cooperative is expected to begin in 2001.
Beef was the winner in Sydney, Australia. Caterers reportedly stocked 243,000 lbs. of beef for the athletes staying in Olympic Village during the 33 days of the 2000 Olympics. That beef figure compares to 150,000 lbs. of poultry and 38,600 lbs. of lamb.
Growth in beef demand will outpace growth in demand for chicken this year.
Scott Brown, livestock analyst with the University of Missouri Food and Agricultural Policy Research Institute, projects that domestic beef demand growth will exceed 4% this year. Meanwhile, chicken is expected to increase only 2%.
"That is a much better position than the weak demand picture seen for beef during much of the 1990s," Brown says.
Meanwhile, total meat consumption per person is projected to reach 218.7 lbs. on a retail weight basis in 2000, Brown says. That's an increase over last year's record level of 218.2 lbs./person.
Argentina will remain on the list of nations considered free of foot-and-mouth disease, says the International Epizootic Office, the world organization for animal health.
An August outbreak of foot-and-mouth disease in Argentina was traced to a handful of cattle smuggled into the country from Paraguay. The discovery of the cattle carrying antibodies for the virus led to suspension of Argentine beef imports by several nations, including the U.S.
Argentina, which was granted the disease-free status only last May, slaughtered 3,500 head of cattle and restricted cattle movement within its borders to control the outbreak.
While Argentina's status remains intact, Argentine exporters worry whether its foreign customers will resume Argentine beef shipments.
Farmland National Beef (FNB) will begin supplying case-ready beef products to Wal-Mart Supercenter stores sometime before Christmas. Previously, FNB was supplying boxed beef to the retailing giant that annually serves more than 100 million consumers nationwide.
Products sold through Wal-Mart will carry the Farmland logo, and the product will most likely be Select grade beef, says Steve Hunt, CEO of U.S. Premium Beef, which owns FNB in partnership with Farmland Industries. During the next 18 months, Hunt says FNB will add three new case-ready beef plants to fulfill its agreement with Wal-Mart.