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Tyson May Raise Bid For Holly Farms

June 15, 1989

OMAHA, Neb. (AP) _ Tyson Foods Inc. may raise its bid to acquire Holly Farms Inc. after a judge denied its latest effort to block the merger of Holly Farms and ConAgra Inc., a Tyson spokesman said Thursday.

A Delaware Chancery Court has denied Tyson’s request to block ConAgra Inc.′ s $1.3 billion stock offer for Holly Farms. The action clears the way for shareholders of ConAgra and Holly to vote on the merger proposal.

Judge Maurice Hartnett on Wednesday also denied Tyson’s bid to force Holly Farms to redeem its poison-pill anti-takeover defense.

James Blair, Tyson’s general counsel, said Thursday that one of his company’s options is to increase its bid for Holly Farms of Memphis, Tennessee.

Tyson, based in Springdale, Ark., has offered $63.50 a share in cash, or $1.1 billion for Holly Farms.

In a flurry of activity that began May 19, directors of ConAgra and Holly Farms approved a new merger agreement that calls for Holly Farms shareholders to receive 2.1 shares of ConAgra stock for each of their Holly Farms shares.

Based on ConAgra’s mid-day Thursday price of $32.625 per share, each Holly share would be worth $68.51.

In his decision, Hartnett said, ″I find that although the directors of Holly Farms have consistently favored ConAgra in the bidding between ConAgra and Tyson Foods for Holly Farms, their (the directors) acceptance of ConAgra’s latest proposal on May 20 was in the best interests of the shareholders of Holly Farms ...″

The judge said that Tyson wouldn’t be harmed if he allowed shareholders of ConAgra and Holly Farms to vote.

″Tyson Foods is also free to make a new enhanced offer which might be accepted by the stockholders of Holly Farms,″ Harnett said.

The judge said he isn’t convinced that the bidding process is over. ″The record indicates that Tyson may have the wherewithal to make an improved bid for Holly Farms,″ Harnett said. ″Don Tyson (Tyson’s chief executive officer) stated as much in his March 5 deposition when he stated that Tyson has not yet made its highest offer.″

In ruling to leave Holly Farms’ ″poison pill″ intact, Hartnett said there was no assurance Holly and ConAgra shareholders would uphold the latest merger proposal and he said Tyson might be able to buy enough Holly stock to block it.

Walt Casey, ConAgra’s vice president of corporate communications, said his company was pleased with the decision. He said ConAgra hopes to have its shareholder meeting by the end of July. Holly’s shareholders would meet at the same time.

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