KANSAS CITY (B)--IBP Inc., the largest U.S. meatpacker, said Oct. 16 its third-quarter profits fell 24% as the company faced higher raw material costs for hogs and cattle than it did a year ago.
Nonetheless, the results exceeded Wall Street expectations. Dakota Dunes, SD-based IBP said it earned $83.9 million, or 79 cents a share, during the quarter ended Sept. 23, 4 cents more than the consensus prediction of analysts surveyed by First Call-Thomson Financial.
That compares with $110.4 million, or $1.03 per share, during the same period last year, a quarter that included a non-recurring tax expense of $13.8 million.
Investors somewhat ignored the upside earnings surprise because Rawhide Holdings Corp., a subsidiary of Donaldson, Lufkin & Jenrette, announced two weeks ago it will pay $2.4 billion in cash and assume $1.4 billion in debt to purchase IBP in a leveraged buyout that will take the company private.
The deal, subject to shareholder approval, values IBP's 106 million outstanding shares at $22.25 each. It will keep IBP's management in place and is scheduled for completion early next year.
IBP's shares rallied modestly in light trading Oct. 16, gaining 2%, or 3/8, to 21 5/16.