IBP Will Weigh a Bid From Smithfield

IBP Inc., which last month agreed to a management-led buyout, said it will consider a competing $4.1-billion bid from Smithfield Foods Inc. that would create the nation’s largest beef and pork producer. IBP, the largest U.S. beef supplier, said in a letter to Smithfield Chief Executive Joseph W. Luter III that it was “prepared to enter into discussions” if the Smithfield, Va.-based pork producer increased its offer of $25 a share in stock. The IBP management group, backed by Credit Suisse First Boston, is not likely to raise its cash bid of $22.25 a share, a source said. CSFB’s merchant banking unit will proceed with a proxy and the syndicated loans in case the Smithfield talks falter or regulators balk at the combination of the nation’s largest pork and beef producers, the source said. Luter, in a separate statement, said he was pleased with IBP’s letter and that his company looked forward to beginning the negotiations. Smithfield wants to add IBP’s one-third share of the U.S. beef market and its No. 2 position in the pork market to its own leading position in the pork business. Smithfield’s shares fell 25 cents to close at $27.75 and IBP rose 13 cents to close at $22.44, both on the New York Stock Exchange.