CHICAGO -- Beatrice Foods and Esmark Inc. signed a definitive merger agreement Thursday which allows Beatrice to acquire Esmark for $2.6 billion cash or $60 per share of common stock.
Esmark also granted Beatrice options to purchase 18.5 percent, or 7.8 million shares, of Esmark's common stock for $56 per share and to purchase Esmark's principal food business, SwiftHunt-Wesson, for $1.3 billion in cash.
The agreement also provides for Beatrice to pay $42.60 cash per share of Esmark preferred stock.
Both Esmark and Beatrice are Chicago-based diversified food and consumer products companies. The merger will make Beatrice the largest company of its kind in the United States.
Both the stock and food business options are exercisable by Beatrice if 'any person acquires or announces its intention to make a tender offer for more than 30 percent of the stock of Esmark,' Beatrice said in a statement.
Beatrice had offered $56 per share for Esmark Tuesday, topping a $2.4 billion offer made by Kohlberg Kravis Roberts & Co., a New York firm specializing in corporate takovers, on May 4.
There had been much speculation in the financial markets that other, higher offers for Esmark might be forthcoming from such large companies as Unilever and Nestle that also produce food and consumer products.
The options should discourage other corporate suitors for Esmark, analysts said, by giving Beatrice the right to buy both a large block of stock and SmithHunt-Wesson, the most attractive and profitable of Esmark's divisions.
The options expire May 31, 1985. Beatrice's tender offer for the Esmark stock will expire June 20.
Beatrice did not indicate whether it would retain the Esmark management.
'It's a little premature to discuss management roles. We think we have an excellent management teamin place as well,' a Beatrice spokeswoman said.
Esmark announced Thursday its second quarter net earnings for fiscal 1984 were $55 million or $1.26 per share, on total quarterly revenues of $1.3 billion.
During the second quarter of fiscal 1983, the company had net earnings of $27 million, or 87 cents per share, on total quarterly revenues of $713 million.
Esmark will pay its normal quarterly cash dividend of 26 cents per common share and 70 cents per preferred share on July 2 to all stockholders of record on June 11, Beatrice said.
Esmark also granted Beatrice options to purchase 18.5 percent, or 7.8 million shares, of Esmark's common stock for $56 per share and to purchase Esmark's principal food business, Swift/Hunt-Wesson, for $1.3 billion in cash.
The agreement also provides for Beatrice to pay $42.60 cash per share of Esmark preferred stock.
Both Esmark and Beatrice are Chicago-based diversified food and consumer products companies. The merger will make Beatrice the largest company of its kind in the United States.
Both the stock and food business options are exercisable by Beatrice if 'any person acquires or announces its intention to make a tender offer for more than 30 percent of the stock of Esmark,' Beatrice said in a statement.
Beatrice had offered $56 per share for Esmark Tuesday, topping a $2.4 billion offer made by Kohlberg Kravis Roberts & Co., a New York firm specializing in corporate takovers, on May 4.
There had been much speculation in the financial markets that other, higher offers for Esmark might be forthcoming from such large companies as Unilever and Nestle that also produce food and consumer products.
The options should discourage other corporate suitors for Esmark, analysts said, by giving Beatrice the right to buy both a large block of stock and Smith/Hunt-Wesson, the most attractive and profitable of Esmark's divisions.
The options expire May 31, 1985. Beatrice's tender offer for the Esmark stock will expire June 20.
Beatrice did not indicate whether it would retain the Esmark management.
'It's a little premature to discuss management roles. We think we have an excellent management team in place as well,' a Beatrice spokeswoman said.
Esmark announced Thursday its second quarter net earnings for fiscal 1984 were $55 million or $1.26 per share, on total quarterly revenues of $1.3 billion.
During the second quarter of fiscal 1983, the company had net earnings of $27 million, or 87 cents per share, on total quarterly revenues of $713 million.
Esmark will pay its normal quarterly cash dividend of 26 cents per common share and 70 cents per preferred share on July 2 to all stockholders of record on June 11, Beatrice said.
