In Re Ibp, Inc. Shareholder Litigation

789 A.2d 14 (2001)

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Nature of the Case

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Facts

P seeks to compel the 'Merger' between itself and D. The Merger Agreement resulted from a vigorous auction process that pitted D against the nation's number one pork producer, Smithfield Foods. During the bidding process, D was anxious to ensure that it would acquire P and to make sure Smithfield did not. D was given a great deal of information that suggested that P was heading into a trough in the beef business. D was alerted to serious problems at P subsidiary, and D knew that P was projected to fall seriously short of the fiscal year 2000 earnings. Even so, D raised its bid by a total of $4.00 a share after learning of these problems. D also signed the Merger Agreement, which permitted P to recognize unlimited additional liabilities on account of the accounting improprieties at the subsidiary. D did not demand any representation that P meet its projections for future earnings or any escrow tied to those projections. D's stockholders ratified the merger agreement and authorized its management to take whatever action was needed to effectuate it. D began having buyer's regret. D made the decision to abandon the Merger because of P's and D's poor results in 2001, and not because of subsidiary or the SEC issues. D terminated the agreement. The court determined the Agreement was valid. It now addresses the issue of specific performance.