J.R. Simplot Co., has sued Pacific Dunlop Ltd for A$49 million ($21 million), claiming it got misleading figures when it bought the Australian company's Edgell food business.
The purchase was made in 1995 for A$470 million. Simplot alleges it was given inaccurate information about the prospects for the business.
"We believe the balance sheet was erroneous in the order of A$20 million," said Terry O'Brien, Simplot Australia managing director. On top of that, Simplot executives said they were misled in prospects for the certain segments of the business.
Simplot is also seeking compensation of A$20 million, claiming they were misled in the costs of manufacturing products for export to Asia. The costs related to freight and raw material expenses, mainly in Edgell's potato business, O'Brien said.
The Boise, ID-based business is concerned that Pacific Dunlop may be taken over before the case is heard in court, limiting their chances for compensation on the four-year-old claim.
"We believe the claim is without merit and will be vigorously defended," Diana Holt, Pacific Dunlop spokeswoman, said.