October 8, 2020

 

US lawsuit between Keystone Foods and Tyson Foods heads to arbitration

 

 

A US federal judge's ruling on September 30 decided to hear a breach of contract lawsuit between Keystone Foods and its previous owner Tyson Foods in arbitration.

 

In November 2018, Tyson Foods acquired certain assets of Keystone Foods for US$2.16 billion from Marfrig Global.  Within five months, in April 2019, Keystone, now known as Beef Holdings, sued Tyson Foods for breach of contract, claiming that the actual purchase price was slashed from US$2.5 billion.

 

In October 2019, Tyson Foods countersued, claiming that Marfrig Global orchestrated certain accounting changes and movements of financial assets between accounts that effectively reduced the value of the business it acquired. Marfrig Global allegedly instructed its Asian operations to prepay bills and buy inventory early to "surreptitiously increase the purchase price Tyson Foods would pay from the business."

 

Tyson Foods also claimed Marfrig Global stole more than US$500,000 of artworks and collectibles that are to be part of acquired assets of Tyson Foods.

 

Tyson Foods argued the disputes over the purchase price falls within the arbitration clause in the purchase agreement. Although COVID-19 slowed down the litigation process, Andrew Carter, district judge of the Southern District of New York, agreed to deal with the claim of breach of contract with Beef Holdings through arbitration in his courtroom. Each party is given until April 2021 to file their joint status report.

 

"We're pleased with the court's ruling. We believe that when the parties involve agrees 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," said Tyson Foods spokesman Gary Mickelson.

 

 - Talk Business & Politics

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