Tyson Foods Inc. (TSN) said Tuesday it settled a lawsuit with swine producers, agreeing to pay $42.5 million to 85 contract producer and take a third-quarter charge of $33 million, or 6 cents per share.

Tyson, the world's largest meat producer, also announced Tuesday it would close poultry plants in Arkansas and Mississippi, adding a charge of $10 million, or 2 cents per share, also for the third quarter.

The dispute with the swine producers in Arkansas and eastern Oklahoma dates to 2002, when Springdale, Ark.-based Tyson restructured its live swine operations. The producers sued and the case has been tied up in Arkansas courts ever since. The producers claimed Tyson led them to invest heavily in their businesses and then cut them off.

"From the beginning, we've sought to resolve this matter in a way beneficial to everyone involved, including the contract growers," said Gene Leman, a Tyson vice president. "While we had hoped to avoid litigation, we're pleased a settlement has finally been reached."

A trial had been set to begin Aug. 1.

Tyson said it retains some live swine operations in the region, including a hog breeding (search) operation in Holdenville, Okla., and several farms in northwest Arkansas. The company said it also has some contract hog finishing operations in the north-central area of Missouri.

Separately, the company said it would combine poultry plants in Arkansas and Mississippi, resulting in the closure of two plants.

Tyson said it would expand its poultry plant at Russellville, Ark., to take in production from its plant at Bentonville, Ark., which is to close Oct. 1.

New lines will be installed at a plant in Forest, Miss., which Tyson said will allow it to combine two plants there into one by early next year.

"These are major projects we believe will contribute to our goals to increase value-added product sales and streamline our ability to produce and deliver the high quality products our customers have come to expect," said Bill Lovette, a Tyson vice president.

The Russellville plant will add 165 jobs, bringing the total number of workers at the plant to 600. The 320 workers at the Bentonville plant, built in the 1960s, will be able to apply at other Tyson plants or receive severance packages, the company said.

Tyson shares fell 22 cents, or 1.2 percent, to $18.81 on the New York Stock Exchange (search).