IN RE IBP, INC. SHAREHOLDERS LITIGATION. IBP, INC., Defendant and Cross-Claim Plaintiff, and Counterclaim Defendant, v. TYSON FOODS, INC. and LASSO ACQUISITION CORPORATION, Defendants, Cross-Claim Defendants and Counterclaim Plaintiffs., 789 A.2d 14

Summary

Cross-claim defendant attempted to back out of a merger, purportedly due to cross-claim plaintiff's financial problems, largely related to one of its subsidiaries. The court held the merger agreement and related contracts were valid and enforceable contracts, not induced by material misrepresentations or omissions. The merger agreement specifically allocated certain risks to cross-claim defendant, including the risk of any losses or financial effects from the accounting improprieties at cross-claim plaintiff's subsidiary, and those risks could not serve as a basis for cross-claim defendant terminating the agreement. None of the non-subsidiary related issues the Security Exchange Commission raised constituted a contractually permissible basis for cross-claim defendant to walk away from the merger. Cross-claim plaintiff had not suffered a material adverse effect within the meaning of the agreement that excused cross-defendant's failure to close the merger. Specific performance was the ...