The Efficiency of Specific Performance in Stock-for-Stock Mergers

Jordan A. Goldstein

This article analyzes IBP, Inc. v. Tyson Foods, Inc. in light of the considerable body of law and economics literature that has developed over the past forty years and posits an economic framework for analyzing the remedy of specific performance in corporate control transactions. The efficiency of specific performance in corporate control transactions turns on a number of factors, including whether the remedy is being sought by a buyer or seller, the form of the consideration, and the relative sizes of the parties involved. Stock-for-stock mergers, and other corporate control transactions involving stock consideration, present unique challenges because of the difficulty of monetizing the harm to the seller’s shareholders in the event that the transaction is not consummated.