Feb. 28 marked the fifth deadline set by Tyson Foods Inc. in effort to purchase IBP Inc. and the Springdale company has decided to forego another extension by implementing its cash election merger option.
The Securities and Exchange Commission continues to investigate issues with IBP’s bookkeeping. Its probe has resulted in the delay of the cash tender offer IBP originally accepted from Tyson on Jan. 1.
“Unfortunately, it was impossible to complete the cash tender offer by [Feb. 28],” said John Tyson, chairman, president and CEO of Tyson Foods. “IBP continues to work with the SEC to resolve their accounting issues. After that work is complete, we will determine what effect these matters will have on our deal.’’
A cash election merger is an option Tyson had in the IBP merger agreement with its SEC filings. It will require both Tyson and IBP to conduct special shareholders meetings. IBP shareholders will vote either in person or by proxy rather than tendering their shares directly to Tyson. They will have the option of either accepting Tyson stock for IBP stock or get a portion of their IBP stock exchanged in cash.
The deal will now be delayed even further, but Tyson obviously did not want to continue setting expiration dates.
“It’s action we’re taking in interest of prudence,” said Tyson spokesman Ed Nicholson. “Until the SEC issues are resolved, it’s impossible to determine what affect those issues will have on the deal.”
Shares already tendered will be returned.
Eighty percent of IBP’s stock had been tendered before Feb. 28.
IBP, the world’s largest producer of fresh meat released a statement saying it still hopes the matter with the SEC is resolved soon.
“While the process for completing this transaction will now change, the basic terms of the agreement do not,’’ the IBP statement read.
The original offer was a total package of about $4.7 billion, including $1.5 billion in assumed debt.