DLJ Investment Unit to Buy Beef Producer

Donaldson, Lufkin & Jenrette Inc.’s investment arm agreed to pay $3.8 billion in cash and debt for IBP Inc., the largest U.S. meat producer, a bet profits will grow as it expands away from slaughtering cattle and into preparing beef and pork for retailers. IBP’s owners will receive $22.25 a share, 22% above Friday’s close. New York-based DLJ, leading a group that includes IBP managers and Decatur, Ill.-based Archer Daniels Midland Co., will spend $2.4 billion in cash and assume $1.4 billion in debt. Shares of Dakota Dunes, S.D.-based IBP are down 38% the last five years. IBP earnings have been hurt by the rising cost of livestock and the company’s dependence on low-margin sales of commodity meats. If the purchase is completed as planned in early 2001, DLJ Merchant Banking Partners III and affiliated funds will own 55% of IBP through newly formed Rawhide Holdings Corp. ADM will double its stake to one-fourth from about 12%. Booth Creek Partners and IBP management will own the rest. IBP shares rose $3.44 to close at $21.75 on the New York Stock Exchange.