IBP Purchase Creates Shockingly Big Tyson.

TYSON FOODS, LONG AN ANCHOR OF ARKANSAS industry, progressed to a new level, in 2001 to become the Arkansas Business newsmaker of the year.

But Tyson's metamorphosis into a huge global company with new leadership appeared to occur quietly -- or as quietly as it's possible for a large publicly traded company in a relatively small state to execute a series of historic changes.

Tyson stayed in the spotlight almost continually as it battled hard for possession of South Dakota meat processor IBP Inc. and then even harder to get out of the deal. But it's now clear, from a year-end perspective, that the legal and corporate wrangling only obscured the company's graduation to new economy titan.

Aside from leapfrogging from No. 257 to No. 74 on the list of largest U.S. companies, the Springdale company saw the retirement of the man who built the modern Tyson Foods, senior chairman Don Tyson.

Tyson's son John became CEO in 2000, and he now stands alone on the bridge with plenty of opportunity to show his stuff. Just as the acquisition of IBP began to gel, the company was hit with a 36-count federal indictment charging conspiracy to smuggle in illegal aliens to work in chicken-processing plants. (See story on Page 17)

After reducing its debt load last fall, Tyson pursued reluctant IBP Inc., a Dakota Dunes, S.D., meat-processing company with 49,000 employees and 1999 revenue of $14.1 billion.

Though the company had been divesting itself of all non-poultry businesses, the lure of becoming the world's leading marketer of beef, pork and chicken was too good to pass up, said John Tyson, who called the potential deal "a rare point-in-time opportunity."

Tyson's was one of three offers for the meat company. IBP management and the investment firm of Donaldson Lufkin & Jenrette tried to buy the company in October 2000. Smithville Foods Inc. made an offer Nov. 12. Tyson followed with a $4.2 billion pitch in early December.

Tyson eventually carried the day, but it terminated the offer in March after the Securities and Exchange Commission investigated IBP for previous irregularities. IBP sued to force the merger, and a Delaware judge ruled in June that Tyson could not back out of the deal.

The purchase closed in late September.

Shocking

Diverted by the fireworks surrounding the IBP deal, Arkansans will be surprised to see how large the company has become, Perry Webb, president of the Springdale Chamber of Commerce, said after the deal was done.

"I've heard all the statistics and analogies," Webb said. "I just don't think people realized how big this deal is. It still shocks me a little."

Indeed, Tyson and IBP joint annual revenue of $24.1 billion in 2000 surpasses such household names as Microsoft, PepsiCo, FedEx and Anheuser-Busch.

"Obviously, this makes [Springdale] more of a presence in the food industry," Webb said. "It creates the potential for us to take advantage of even more assets. How our region does relates to a better quality of life here and makes things easier and better to do for all of us."

The company, long the top poultry processor in the United States, should now dominate the meat industry, controlling about 28 percent of the beef market, 25 percent of the chicken market and 18 percent of the pork market.

Rival ConAgral. Foods Inc. of Omaha, Neb., will still rank higher -- No. 68 in 2000 with $25.4 billion in revenue. But much of ConAgra's sales come from grain.

Progressive Retirement

Don Tyson's retirement, announced in a two-paragraph news release Oct. 22, stands as a milestone for the company, despite me gradual, low-Key manner that has characterized his withdrawal from leadership. He vacated the chairman role in 1995 for the title of senior chairman, but he has clearly kept a hand on the rudder. No more, he said in October, as he reached for a smaller rudder.

"This is just one more stop in a 'progressive retirement' plan that I began in 1995 when I turned 65 and stepped down as chairman," he said in the release. "Now that we have completed the IBP acquisition and the integration of Tyson and IBP is well underway, it is time for me to relinquish this last title, and let the management of the new company have full control. I am confident that my son John, and the leadership team he has put together, are fully prepared to take the company to the next level as the premier protein provider on the planet. I look forward to following their progress from my boat."

The elder Tyson will remain on the company's board of directors, he said.

The company's stock, traded on the New York Stock Exchange, has fluctuated from about $8 a share to a high of more than $15 in the past year. It closed Dec. 20 at $10.39.

Tyson employs 120,000 people worldwide, the company said. Total payroll in 2000 topped $2.8 billion.

Tyson's Place Among U.S.Corporations

Rank  Company                    Revenue

                              (millions)
1     Exxon-Mobil               $210,392
2     Wal-Mart Stores           $193,295
3     General Motors            $184,632
4     Ford Motor                $180,598
5     General Electric          $129-853
6     Citigroup                 $111,826
7     Enron                     $100,789
8     IBM                        $88,396
9     AT&T                       $65,981
10    Verizon Communications     $64,707
14    SBC Communications         $51,476
17    Duke Energy                $49,318
55    Reliant Energy             $29,339
68    ConAgra                    $25,385
74    Tyson-IBP combined         $24,107
79    Microsoft                   $22956
117   IBP                        $16,949
122   Weyerhaeuser               $15,980
162   Union Pacific              $11,878
187   Entergy                    $10,016
218   Dillard's                   $8,818
257   Tyson Foods                 $7,158
265   Alltel                      $7,067
268   Firstar Corp                $6,997

Source -- Fortune Magazine