US meat giant Tyson Foods has asked a Delaware court to throw out a landmark ruling on its merger with IBP as the country's largest producer of beef, chicken and pork seeks ammunition in a legal tussle with shareholders who say they lost money in the deal.
In an appeal filed on Tuesday, Tyson asked the Delaware Supreme Court to overturn the legal conclusions last June by the state's Chancery Court. Tyson also argued that the case should have been tried in Arkansas, not Delaware.
The decision said that Tyson, which is forced to take over IBP, could not invoke the "material adverse change"- or MAC - clause of its agreement and walk away from a proposed takeover of IBP.
Rather than fight the decision at the time, Tyson settled the case and bought IBP. However, Tyson is faced with lawsuits by some former IBP shareholders who say that the company misled investors when it said it was abandoning the deal with IBP.
If Tyson were to win its appeal, it would strip the investors of any basis for their case, a Tyson source said."If the Supreme Court says Tyson had the right to walk away because of the MAC, then the federal lawsuit will be dismissible right away," the source said.
Tyson, which had reached a deal with IBP on 1 January 2001, later argued it should be allowed to abandon the buyout because of restated financial information by IBP in March 2001.Tyson said the changes fell under the purview of the MAC clause, which are inserted into agreements so that one side can pull out of a merger agreement if anything substantial changes between the time a deal is struck and when it is completed.
The court said Tyson was trying to get out of the deal because of "buyer's regret" and not because of any accounting or financial concerns.