In an attempt to clear up an accounting mess that is threatening the proposed US$3.2bn (€43.46bn) purchase of IBP by Tyson Foods, IBP has said it will take as much as US$47m in a pre-tax charge against 2000 earnings.
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Tyson is upset over accounting inaccuracies found at DFG Foods, a subsidiary owned by IBP. “IBP has communicated with us on several occasions concerning the status of the DFG subsidiary, however, each communication discussed ever increasing one-time charges,” Tyson said in a statement Friday. “Only today did we learn of the new US$47m dollar increase.”
It emerged last week that the US Securities and Exchange Commission (SEC) had raised dozens of questions about IBP financial statements before the company accepted Tyson’s cash-and-stock offer, worth US$30 a share, on January 1 2001. Predictably, executives at Tyson are furious that the company wasn’t fully briefed about the seriousness of accounting problems at IBP while it was going through the meatpacker’s financial books late last year to determine what IBP was worth. IBP waited until January 10 2001 to notify Tyson about a December 29 2000 comment letter from the SEC about financial irregularities. IBP said it submitted a written response to SEC questions on Friday.
Speculation is growing on Wall Street that Tyson may pull out of the deal having twice delayed closing the cash portion of its tender offer, with a new expiration date of Feb. 7. Tyson has yet to begin the stock-swap portion of its offer. Tyson say its acquisition of IBP will go through despite the problems, though they may now seek to renegotiate a cheaper price for the proposed takeover.
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