Rumor that Oxy is selling subsidiary spurs trading; firm claims $10 billion IBP meat-packer isn't for sale.Rumor that Oxy is selling subsidiary spurs trading Firm claims $10 billion IBP IBP (Fraunhofer) Institut für Bauphysik (Stuttgart, Germany) IBP Interactive Business Planner IBP Integrated Bar of the Philippines IBP International Buyer Program meat-packer isn't for sale Shares of Occidental Petroleum Occidental Petroleum Corporation ("Oxy") NYSE: OXY is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America regions. Corp. were among the most active issues on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. late last month, amid renewed speculation that it would sell its IBP meat-packing subsidiary. Ray Irani, Occidental president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , however, stated as recently as last March that he has turned down several offers for the $10 billion subsidiary and is not pursuing a buyer. On June 21, a total of 1.3 million shares of Occidental common stock changed hands, closing at $25.875, up 12.5 cents for the day. Occidental president and chief operating issues on the Big Board at least three times late last month. A nationally televised news report attributed the June 21 trading levels to rumors that Oxy was prepared to sell its 50.5 percent interest in Dakota City Dakota City may refer to:
On June 18, Standard & Poors Corp. downgraded Oxy's $8.2 billion debt and its preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , spurring the heavy trading trend. Citing high fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). , heavy dividend demands and expected weak earnings, S&P downgraded the debt. The day of the announcement, Oxy shares were down $1 to $26.25. Oxy common closed at a 52-week low of $25.25 on June 27. "There has been no adverse change in Oxy's financial picture," said Irani, responding to the S&P downgrade and reaffirming that the company would maintain its long-standing $2.50 a share annual dividend. "The lower debt rating will have very little impact on Oxy as our debt maturity schedule has no more debt coming this year, and only $52 million coming due next year." The nationally televised report speculated that IBP would be sold to retire a portion of the debt. But a Los Angeles analyst said that talk of IBP's impending im·pend intr.v. im·pend·ed, im·pend·ing, im·pends 1. To be about to occur: Her retirement is impending. 2. sale could simply be another Oxy rumor that refuses to die. "It's been rumored that Iowa Beef would be sold for some time because it doesn't mix naturally with Occidental's other properties," said Craig Schwerdt of Los Angeles-based Seidler Amdec Securities Inc. He said that he had no facts that would cause him to speculate that IBP would be sold in the near future. "It's an off-and-on rumor," he said. "Whenever Occidental's stock moves, Wall Street analysts speculate that IBP will be sold. Wall Street can't see how IBP fits into the rest of the company. A rumor of an impending sale of IBP is often as good an excuse as any to explain activity in Occidental's shares." Analysts apparently wonder where the IBP beef is in Occidental's overall corporate profile, Schwerdt said. By the nature of its business, IBP is almost a stepchild step·child n. 1. A child of one's spouse by a previous union. 2. Something that does not receive appropriate care, respect, or attention: "Demography has a reputation for being the stepchild of . . . in the $21 billion (1989 revenues) Oxy empire. Oxy, based in West Los Angeles
IBP is the only subsidiary not wholly owned by Occidental. Occidental bought IBP lock-stock-and-barrel in 1981, in an $800 million stock swap. It received $960 million in 1987, when IBP issued new stock, reducing Occidental's interest in the beef packer to 50.5 percent. The maneuver was attributed to Irani, the heir-apparent to Armand Hammer, 92, the oldest chairman of a Fortune 500 company. While IBP has nothing to do with oil, gas or chemicals, some consider the company a jewel, said one Wall Street analyst. Famed for pioneering the concept of boxed beef boxed beef the alternative to carcass meat. Major cuts, often deboned, are packed in sealed plastic bags and packed in strong cardboard boxes. , the IBP process reduces cost by trimming bone, fat and hides from a cow before shipping it in boxes to grocery stores and other buyers. For example, a 1,000 lb. side of beef Noun 1. side of beef - dressed half of a beef carcass side of meat, side - a lengthwise dressed half of an animal's carcass used for food chuck - the part of a forequarter from the neck to the ribs and including the shoulder blade can be reduced to the 422 lbs. of boxed beef before it is shipped to market. IBP is the leading beef-production company in the United States with about 24 percent of the market. Last week, it furthered its expansion into pork -- an Oxy directive. Just after buying the company, Occidental steered IBP toward pork processing. IBP's pork business has grown from nothing to 12 percent since 1982. Late last month, it opened its newest pork facility in Waterloo, Iowa. Designed to handle 15,000 hogs a day, the new plant cost an estimated $40 million to build, a source said. |
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