990649 Meatpacker IBP to Buy Thorn Apple ValleyJune 30, 1999
Chicago - Thorn Apple Valley Inc. said it agreed to sell its operating assets to IBP Inc. for about $112 million.
Thorn Apple Valley, which declared Chapter 11 bankruptcy on March 5, said the proceeds of the sale are not expected to be enough to provide any distribution to its shareholders.
The deal came as no surprise in the hog industry, where analysts and traders had expected such a sale. It's been pretty much rumored that was going to happen. The only question was when, said David Maher, an analyst with Securities Corp. of Iowa.
Thorn Apple Valley said in April it suffered enormous damage to its reputation when USDA condemned 30 million pounds of hot dogs produced at its Arkansas plant as unfit for human consumption.
Thorn Apple had issued a costly recall of the meat products in January on suspicion of possible contamination by the deadly listeria bacteria, the largest such recall on record.
Thorn Apple Valley, based in Southfield, Michigan, said IBP plans to continue to operate Thorn Apple Valley plants with current management and personnel. IBP is based in Dakota Dunes, South Dakota.
Thorn Apple Valley currently has processing plants in Oklahoma, North Carolina and Michigan that make bacon, hams, hot dogs and other meat products.
Maher said the purchase was good for IBP because it will provide the company with such brand-name meat products as Wilson, Colonial and Thorn Apple Valley.
Maher also applauded the deal because it should keep meat plants open that otherwise might have been closed. It keeps the demand there (for hog farmers) and that's what's important, he said.
The sale to IBP remains subject to the approval of the federal Bankruptcy Court and other regulatory bodies, IBP's completion of its review of Thorn Apple's properties, Thorn Apple's continuing to operate in the ordinary course of business and there being no material adverse change in Thorn Apple's operations prior to the closing of the sale, Thorn Apple said.
Thorn Apple said its debt is currently well in excess of the proposed purchase price. We look forward to completing this sale and providing stability to our valued employees, customers and suppliers, Joel Dorfman, Thorn Apple president and chief executive officer, said.
The bankruptcy process has been a difficult one for all concerned, and we believe that the sale of assets to IBP provides the best result obtainable for Thorn Apple Valley and all those associated with it, he said.
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