Tyson Foods Defeats IBP Merger Class- Action Suit
{{#rendered}} {{/rendered}}A federal judge in Delaware has granted summary judgment to Tyson Foods Inc. (TSN), the world's largest meat processor, in a securities class-action lawsuit that claimed the company lied about its reasons for attempting to back out of a deal to buy rival IBP Inc (search).
U.S. District Judge Sue Robinson ruled Thursday that former Tyson senior chairman Don Tyson (search) and his son John, present chairman and chief executive of the company, could not be held liable for allegedly false statements in a March 2001 press release announcing the end of the planned merger.
Tyson did ultimately acquire IBP, on orders from Vice Chancellor Leo Strine of Delaware's Court of Chancery, who found the poultry producer was not fraudulently induced into the merger and should be held to the deal.
{{#rendered}} {{/rendered}}Unless the hedge funds that brought the lawsuit on behalf of all IBP stockholders appeal, Robinson's ruling ends a legal action that carried the potential for hundreds of millions of dollars in damages.
The four institutional investors who served as lead plaintiffs said in court papers they lost more than $20 million when Tyson's move to escape the merger triggered a steep drop in IBP's stock price.
An attorney for the hedge funds was not immediately available to comment on the ruling, which said the Tysons were under no duty to tell shareholders the business reasons for their decision not to go forward with the deal.
{{#rendered}} {{/rendered}}Tyson General Counsel Les Baledge, who issued the press release, may have believed the reason cited in the statement for the end of the deal — that IBP had misled its acquirer — even if Strine found that was not true, Robinson said.
Since Baledge, not the Tysons, issued the press release, the father-and-son team at the top of the company could not be held to account for omitting the real reasons Tyson moved to end the deal, the judge said.
Don Tyson was senior chairman at the time, while his son was president.
{{#rendered}} {{/rendered}}Shares of Tyson were down 41 cents, or 2 percent, at $19.99, on the New York Stock Exchange (search).