A lawsuit between Tyson Foods the former owner of Keystone Foods over the acquisition of Keystone Foods will now be heard in arbitration, according to a federal judge’s ruling on Wednesday, (Sept. 30).
Tyson Foods acquired certain assets of Keystone Foods for $2.16 billion from Marfrig Global in November 2018. Within a few months, Keystone, now known as Beef Holdings, sued Tyson Foods in April 2019 claiming the actual purchase price was slashed from $2.5 billion, calling it a breach of contract.
Tyson Foods countersued in October 2019, claiming Marfrig orchestrated certain accounting changes and movement of financial assets between accounts that effectively reduced the value of the business it acquired. Marfrig also allegedly instructed its Asian operations to prepay bills and buy inventory early in order to “surreptitiously increase the purchase price Tyson Foods would pay from the business.”
Tyson Foods also claimed Marfrig stole more than $500,000 of artwork and collectibles that were to be part of the assets Tyson Foods acquired.
Amid COVID-19, progress on the litigation has been slow. Tyson Foods argued the disputes over the purchase price fall within the arbitration clause in the purchase agreement. U.S. District Judge Andrew Carter with the Southern District of New York agreed, stating Wednesday the claim of breach of contract with Beef Holdings will be dealt with through arbitration and remain in his courtroom. Each party has until April 2021 to file a joint status report.
“We’re pleased with the court’s ruling. We believe that when the parties involved agree to an alternative dispute resolution, they should be held to that agreed process. Arbitration advances important dual goals of providing thorough and cost-efficient resolution processes and alleviates the strain on our courts,” noted Tyson Foods spokesman Gary Mickelson.