Originally created 09/05/97

Tyson acquires Hudson Foods just weeks after beef contamination scare



LITTLE ROCK, Ark. - Tyson Foods, the nation's largest poultry producer, is buying Hudson Foods for $642 million just weeks after Hudson recalled a record 25 million pounds of hamburger in a contamination scare.

"They have made us a very good offer, and the Hudson Foods board and I have decided that it is in the best interest of our shareholders, associates, growers and customers to accept," Hudson chairman James "Red" Hudson said Thursday.

The deal, which is subject to regulatory approval, comes a week after Hudson said it expected its quarterly earnings to be down by at least 30 percent because of the E. coli scare, which cost Hudson its biggest customer, Burger King.

Hudson recalled the meat under government pressure after ground beef processed at its plant in Columbus, Neb., was found to be tainted with the deadly bacteria. It was the biggest meat recall in U.S. history.

USDA officials are still investigating but have said the contamination is believed to have come from slaughterhouses that supplied the plant. Hudson said last week it will sell the plant to IBP Inc. of Dakota City, Neb.

Hudson and Tyson have headquarters about 10 miles apart in Arkansas. Tyson, one of the state's largest employers with 17,500 workers, is in Springdale. Hudson, employing 1,400, is in Rogers.

James Hudson founded the business in 1972, buying poultry-processing operations in Arkansas and Missouri from Ralston Purina. It branched into the ground beef business two years ago.

Tyson is politically connected and has close ties to President Clinton. Three years ago, it was revealed that company's general counsel, James Blair, suggested Hillary Clinton get into the cattle futures market shortly before her husband was elected governor of Arkansas. She turned a $1,000 initial investment into nearly $100,000 in a little over a year.

Most recently, Tyson came under scrutiny in the investigation of former Agriculture Secretary Mike Espy. Mr. Espy resigned after accepting tickets to sporting events and other favors from Tyson, a company his agency regulated. Espy was indicted on federal charges last week. Tyson has denied any wrongdoing.

Tyson has agreed to exchange $8.40 in cash and six-tenths of a share of its stock for each of Hudson's 30.25 million shares.

Hudson stock closed Wednesday at $17.19. Trading in the stock was suspended before the market opened Thursday.