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Ben & Jerrys Homemade Executive Summary Increasing competitive pressure and Ben & Jerrys declining financial performance has brought a number of takeover offers. Henry Morgan is a member of the board of directors of Ben & Jerrys Homemade and was elected to represent the interests of the shareholders. Morgan will attend the board meeting for considering the pending offers. If the firm takes the offer, the firm will lose control of its assets and social orientation; however, Ben & Jerrys shareholders would like the offer to be accepted. Despite his concern for Ben & Jerrys social interest, he has to decide whether or not to accept a takeover offer. Four offers are currently on the table. The bidders are Dreyers Grand, Unilever, Meadowbrook Lane, and Chartwell. Each offers different prices and proposals. Rejecting offers and finding ways to create value would be another alternative solution for Ben & Jerrys. However, accepting Unilevers offer seems to be the best solution for Ben & Jerrys Homemade. Analysis The problem is that Morgan has to choose between his concern for the companys social interest as a member of the board of directors and the interest of the shareholders as their representative. Ben Cohen and Jerry Greenfield, the cofounders of Ben & Jerrys, and Morgan feel that the firm will lose control of assets by accepting an offer. They know the companys social orientation requires corporate independence. Since Ben & Jerrys was founded in 1978, the firm has emphasized social objectives in every aspect of the business, including marketing, operations, and finance. The firms mission statement also includes social dimensions as well as product and economic dimensions. Ben & Jerrys has tried to seek new and creative ways of fulfilling each without compromising the others. If a large traditional company takes over Ben &

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Jerrys, the firms social mission may or may not survive. Despite Morgans concern for Ben & Jerrys social interest, he has to stand for Ben & Jerrys shareholders to represent their interest. Shareholders would be best served by selling out to the highest bidder. For a company with great brand awareness, about a 45% of market share of the super-premium ice cream market, successful new product rollouts, and decent traction in its international expansion efforts, puttering share price around $21 is not what Ben & Jerrys shareholders expected. An alternative is that Ben & Jerrys could reject the offers and find new ways to create more value; however, as most shareholders believe, selling out makes more sense. Financial key indicators show that poor financial performance is due to poor management of Ben & Jerrys assets rather than the economic situation or material cost. The firm was able to meet its social and product quality goals, but did not meet maximizing shareholders value due to poor management. The firms key financial performance indicators (EBIT, Net Income margin, and ROE) show that Ben & Jerrys has not met shareholders expectations, while the revenues stably increased (Exhibits 1 and 2). Selling out is also the best option to use clientele effect because it may positively affect the price of the stock when the firms circumstances change. Therefore, selling out may increase the firms market cap as well as the shareholders value. There are four offers that attract Ben & Jerrys:

Bidder Dreyers Grand Unilever

Offering Price $31

Price Premium per Share $10

Premium % Management

Social Encourage

Autonomy QuasiAutonomous

48%

Maintain Some

(stock) $36 $15 71% Select

Limit

Integration

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(cash) Meadowbrook Lane $32 $11 (cash) Minority Chartwell Interest Unknown Unknown New Allow Independent 52% New Select Independent

Recommendation Accepting Unilevers offer would be the best decision for Ben & Jerrys. Unilever has the global presence which may lead Ben & Jerrys to find new ways to maximize shareholders value, revenue, and assets, because Unilever is the largest producer of ice cream in the world. Furthermore, Unilever offers the highest price in cash, which is 71% of the premium. Ben & Jerrys shareholders would benefit from the highest price in cash. Changing some of Ben & Jerrys management and limiting some social commitments would positively affect Ben & Jerrys. These two actions may increase the managements performance and reduce the firms social activity expenses to allow for profitable growth and increase value for shareholders and employees. Although, the firms social orientation may become less important, this offer is the best alternative that will allow Ben & Jerrys to create more value and stay in business.

Exhibit 1

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Key Performance
$250.0 $200.0

Millions

$150.0 $100.0 $50.0 $Revenue EBIT

1994 $148.8 $2.8

1995 $155.3 $9.8

1996 $167.2 $6.4

1997 $174.2 $6.4

1998 $209.2 $9.1

1999 $237.0 $8.9

Exhibit 2

Key Performance
10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1994 -2.0% -4.0% Net Income Margin ROE 1995 1996 1997 1998 1999

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