Tyson Agrees to Buy IBP for $3.2 Billion

Would you like chicken or beef with that?

No, it's not a wedding, but a union of another kind.

Big chicken producer Tyson Foods (TSN Quote) announced this morning that is has agreed to buy beef producer IBP (IBP Quote) for about $3.2 billion in cash and stock, broadening Tyson's food business.

The deal, which also calls for Tyson to assume about $1.5 billion in IBP debt, comes as a bit of a surprise. It had been rumored that IBP would be purchased by either DLJ Merchant Banking or pork producer Smithfield Foods (SFD Quote).

During the first full year of the deal, Tyson said IBP will add to its net income by 15% and to its cash earnings by 20%.