Investor sues to stop Tyson-AdvancePierre deal

Dive Brief:

  • A lawsuit claims AdvancePierre did not give investors material information that they need to decide whether to support a takeover by Tyson, according to Meat + Poultry. The plaintiff, Stephen Bushansky, is asking the U.S. District Court for the Southern District of Ohio to block the deal.
  • Court documents indicate the company also did not include adequate data and analysis that support the financial evaluation from Credit Suisse Securities and Moelis, which serve as financial advisers to AdvancePierre. The information is needed to verify this is a fair deal for the company and its shareholders.
  • The complaint also claims that the transaction would benefit executives at AdvancePierre. “Company insiders stand to reap a substantial financial windfall for securing the deal with Tyson,” it says.

Dive Insight:

Tyson Foods, the No. 1 U.S. meat processor, said in April it would purchase convenience and ready-to-eat foods company AdvancePierre in a deal valued at $4.2 billion. The deal is an important one for the meat giant, which also has announced plans to explore selling some of its non-meat brands. 

For Tyson, AdvancePierre would bulk up its position in the growing snack space — expanding its reach into items such as cheesestakes, microwaveable sandwiches and peanut butter and jelly sandwiches. Other big players in the food space have announced their own snack deals, including Conagra buying Thanasi Food, the upstart food manufacturer behind the Duke’s meat snacks brand, and Hershey purchasing Krave and barkTHINS

It remains to be seen if this latest complaint will be get traction in the courts. AdvancePierre's stock jumped nearly 10% soon after the deal was announced.

Shareholders regularly sue after a takeover, and most of the time the lawsuit fails to advance. In one case, the CEO of Dole Foods, who took the company private in 2013, agreed to settle on a claim that he drove down the stock price and underpaid shareholders. Dole recently announced plans to return to Wall Street with an IPO.

In the AdvancePierre deal, court documents cited by Meat + Poultry note that former president and CEO John Simons Jr. could gain nearly $60 million in the takeover when he tenders his shares.

Still, the Tyson and AdvancePierre transaction is unlikely to unravel. If anything, Tyson could have to pay more to buy the company, but even that is far from certain. 

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Filed Under: Manufacturing Corporate
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