Tyson calls off IBP deal

March 29, 2001: 6:06 p.m. ET

Company says merger was based on misleading financial information; IBP shocked

NEW YORK (CNNfn) - Tyson Foods Inc. called off its proposed merger with IBP Inc. Thursday, citing misleading financial information.

Tyson sent a letter to IBP stating it relied on misleading information in determining to enter into a merger. IBP restated its financial statements at the request of the Securities and Exchange Commission.

"Consequently, whether intended or not, we believe Tyson Foods Inc. was inappropriately induced to enter into the Merger Agreement," Tyson said in its letter. "Further, we believe IBP cannot perform under the Merger Agreement."

"We simply cannot endorse a decision to complete the transaction under the facts as we understand them today," said John Tyson, chairman and CEO, in a statement. "My decision today was based on what I felt was in the best interest of our Company and its shareholders."

IBP said in a statement it was "shocked" by the announcement.

"We are shocked by Tyson's announcement," the company said. "This comes as a complete surprise. As recently as this week, our sense was that Tyson had every intention of going through with this transaction."

IBP said it does not believe there is any valid basis to end the merger, there were no material impacts of the financial restatements and that Tyson was "aware of the potential for additional write-downs at IBP's DFG Foods unit before the merger agreement was signed."

In February Tyson terminated its cash tender offer for 50.1 percent of IBP after missing the tender-offer deadline, but said it would try to acquire the company through other means.

Shares of Tyson (TSN: Research, Estimates) were unchanged at $11.50 Thursday on the New York Stock Exchange, while IBP (IBP: Research, Estimates) fell 16 cents to $22.79.