A Delaware Chancery Court Judge has ordered Tyson Foods and IBP to kiss and make up. Judge Leo Strine ended the nine-day court battle between the two meat companies by ruling that Tyson had to follow through with its offer to purchase the Dakota-Dunes, S.D.-based IBP. He said that Tyson “improperly terminated” its agreement with IBP, and that Tyson’s actions were little more than “buyer’s remorse.” The other option would be to require Tyson to pay damages to IBP but Strine said the amount would be “staggeringly large.”

Of course the thing that started the whole legal debacle was when the federal government uncovered accounting irregularities at an IBP subsidiary based in Chicago.

So the original offer made on Jan. 2, where Tyson would pay $3.2-billion and pick up another $1.5 billion in IPB debt, is back on the drawing board. A decline in Tyson’s stock has dropped the cash offering to $2.76 billion. Officials from both companies have met to start hammering out the details, with Tyson personnel stating that the company would not appeal the court’s decision.

What this now means is Tyson/IBP will become the United States’ largest meat supplier by a wide margin. It will control 33 percent of the chicken market, 31 percent of the beef market and 18 percent of the pork market. This will make Tyson/IBP and attractive one-stop supplier for a consolidating retailer industry. Tyson brings its tremendous marketing know-how to the mix, while IBP is rich in packing experience.

Analysts expect the company to dominate the consumer-ready product market. That will spell tremendous additional change in the retail meat sector as grocery stores will no longer need the number of butchers and meat cutters as in the past. Of course, that fact appeals to retailers because it reduces their in-store costs, making them more efficient. It also places more attention on product quality and offers added food safety security.

“The deal should continue the long-term trend toward reducing the number of steps between the producer and consumer,” says Todd Duvick, food industry analyst with Bank of America. “Longer term, it will add pressure to their competition and continue the rate of consolidation in the meat processing industry.”

The impact on producers will depend on whether any packing plants are lost in the shuffle. “The biggest concern among pork producers is that Tyson will want to start producing pork,” says Glenn Grimes, University of Missouri agricultural economist. The poultry giant currently has some pork production units, but generally the venture has met with marginal success. “IBP has shown no signs that it wants to become a producer,” adds Grimes.

Still, not everyone supports the judge’s ruling and the pending merger. Sen. Tim Johnson (D-SD) is calling the Bush Administration for an anti-trust review of the deal. “Tyson’s acquisition of IBP could allow it to control more of the meat sold through grocery stores than any other food company in America,” he says. He contends it also would ultimately reduce the number of U.S. meat packers.

While Johnson is likely to get support from some of his peers in regard to his request, it’s unlikely that anything will derail this purchase again.