Tyson Hikes Bid for Holly Farms to $1.1 Billion : Deal Hinges on Halting Merger With ConAgra

SPRINGDALE, Ark. — Tyson Foods Inc. on Wednesday sweetened its buyout offer for Holly Farms Corp. but made completion of the deal contingent on the termination of Holly Farms’ merger with ConAgra Inc.

The nation’s biggest poultry processor boosted its cash tender offer to $54 a share, or about $1.1 billion for Holly Farms’ 20.4 million outstanding common shares and equivalents, from $52 a share, or about $1.06 billion.

Tyson stated in a letter to the board of Memphis, Tenn.-based Holly Farms that the offer was subject to termination or invalidation of Holly Farms’ merger with ConAgra and its agreement to sell ConAgra some of its prize assets if acquired by a third company, such as Tyson.

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Tyson also offered to pay cash and stock it valued at $57 a share for control of Holly Farms under a two-step buyout if the company terminated its merger with ConAgra and negotiated a new agreement with Tyson.

The company said it remained willing to revise its new proposals and threatened to put the latest offers directly before shareholders if Holly Farms continued its refusal to negotiate.

A Holly Farms spokesman at the company’s headquarters was said to be unavailable for comment.

Holly Farms has rejected Tyson’s previous takeover offers and on Nov. 16 agreed to a stock swap merger with Omaha-based ConAgra that the Holly Farms board valued at $59.25 a share. That merger with Holly Farms, the nation’s second-largest poultry processor, would make ConAgra the nation’s biggest poultry concern.

In agreeing to the merger, Holly Farms granted ConAgra a so-called lockup option to buy key Holly Farms assets in the event a third company acquires Holly Farms. It also agreed to pay ConAgra a $15-million “bust-up fee” if their merger falls through.

Tyson is challenging those provision in Delaware Chancery Court.

Holly Farms stock closed at $53.50 a share, up $1 in New York Stock Exchange trading. Tyson dipped 50 cents a share to $15.50 in national over-the-counter trading.