Ben and jerry's stock price

This case was prepared by Senior Researcher Gerry Yemen, Professor Yiorgos Allayannis, and Associate Professor Michael J. Schill. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright  2011 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation.

BEN & JERRY’S HOMEMADE: THE UNILEVER SCOOP

Four offers were on the table to purchase Ben & Jerry’s Homemade (Ben & Jerry’s) in

early 2000; in the end, Unilever’s deal was by far the most attractive. And now, 10 years after becoming a subsidiary of the Dutch global consumer product company, much had changed at Ben & Jerry’s—and much had remained the same.

By the time the purchase was announced in South Burlington, Vermont, on April 12,

2000, Ben & Jerry’s pre-deal stock price of $21 had increased substantially, to just shy of $35, and the company had $237 million in sales and $3.4 million in earnings. Unilever had increased its earlier tender offer of $36 to $43.60 per share or $326 million total, to be paid in cash (see Exhibit 1 for stock price charts).1 Both Unilever and Ben & Jerry’s hoped to benefit from the acquisition.

The Unilever muscle offered Ben & Jerry’s an opportunity to scale up and enter several

new markets internationally—something it had not been able to do previously. Unilever was one of the largest global firms in the world operating in 88 countries, employing 255,000 worldwide, and earning sales over $45 billion in 1999.2 Within the US, the company had 66 offices, manufacturing operations in 23 states, 22,000 people, and over $8 billion in sales. With increased access to capital and resources, Ben & Jerry’s would have the potential to dramatically increase the size and social impact of its brand.

Unilever was looking to satisfy investor pressure to grow. And part of the company’s

growth strategy had included several larger acquisitions before this one. (It acquired 20 companies in 2000.) Ben & Jerry’s gave Unilever an edge in the competitive “super-premium” ice cream segment in several U.S. markets—something else it had not been able to do previously. In addition, Nestlé had entered a joint venture with Häagen-Dazs to leverage each

1 “Unilever Scoops Up Ben & Jerry’s,” BBC News, April 12, 2000, http://news.bbc.co.uk/2/hi

/business/710694.stm (accessed August 4, 2011). 2 U.S. Securities and Exchange Commission (SEC), Unilever Form 20-F, 1999, 12–3 and 41–3.

This document is authorized for use only by Heng Lu (fizzhenry@gmail.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies.

-2- UV5663 other’s distribution channels, which would create a clear advantage in the segment. And with the potential to spread the Ben & Jerry’s brand and values to the world, Unilever would now own a company that validated its corporate social responsibility interests.

As Ben & Jerry’s became part of a conglomerate family, one question remained on the

minds of many: whether Ben & Jerry’s would still have Free Cone Day.

Screaming for Ice Cream As most industry watchers had expected, the deal included a couple of unusual twists.

During negotiations, Unilever seemed to soften its initial proposal restricting Ben & Jerry’s social commitments and interests. Ben & Jerry’s would stay in Vermont, continue to purchase non-BGH (bovine growth hormone) dairy goods from Vermont, and donate 7.5% of its profits to charity, and employees would still get their three free pints of ice cream per day. Ben Cohen and Jerry Greenfield would remain active in the firm’s social agenda and continue to manage the brand, and Perry Odak would remain in the top slot running the firm. Unilever also agreed to pay $5 million to start up a Ben & Jerry’s foundation for funding businesses in low-income communities. The ice cream company would operate as an independent subsidiary (not become part of Unilever’s Breyers or Magnum’s brands) and would have its own independent board of directors, and the CEO would report to both Unilever’s and Ben & Jerry’s boards. Ben & Jerry’s management had full discretion over which of Unilever’s HR policies it chose to adopt or modify. According to Carlos Perseguer, Unilever’s director of ice cream operations in Europe, many of these concessions were based on fear within Unilever of “contaminating” Ben & Jerry’s.3