I.

Introduction
In 1977, Ben Cohen and Jerry Greenfield start their ice-cream business on Burlington,
Vermont. After operated 23 years, Cohen and Greenfields ice-cream brand, Ben & Jerrys
Homemade, had 170 stores across the United States and overseas, with an annual sale of
$237 million, and $160 million valued equity.
On doing their business, Cohen and Jerry balanced their social orientation with product
and economic objectives. Ben & Jerrys Homemade has a mission, where on the progress of
operating the company on a sound financial basis of profitable growth, increasing value for
its shareholders, and creating career opportunities and financial rewards for its employees
still required to make, distribute, and sell the finest quality all-natural ice-cream and related
products, and to operate the company in such a way that actively recognizes the central role
that business plays in the structure of society to improve the quality of life of the broad
community. Ben and Jerrys is not going for any policy without fulfilling all these three
principle.
Now, Ben and Jerrys commitment is challenged by several takeover offers from the
market.

II.

Problem Definition
According to standard corporate governance, maximizing share price will be the most
important and direct goal for company to increase shareholders equity value. In the case of
acquisitions and takeover, the evidence indicates that the stockholders of target firms will be
the clear winners in takeovers, which they can earn significant excess returns. In their article,
The Market for Corporate Control, Journal of Financial Economics (1983), Jensen and

Ruback reviewed 13 studies that look at returns around takeover announcements and reported
an average excess return of 30% to target stockholders in successful tender offers and 20% to
target stockholders in successful mergers. And it will be most economically feasible for
shareholders to accept an offer with a highest value bid.
However, are Cohen and Greenfield, holders of 47% of voting share of Ben & Jerry, who
put social orientation of a company as important as its product and economic objective
focusing only on the economical profit? How about if the bidder with the highest price is
proposing to install a new management team which has no assurance of the company highcost social contribution? What will happen if Ben and Jerrys Homemade lose their social
value?
III.

How has Ben & Jerry's fulfilled its mission statement? What evidence can you
provide regarding Ben & Jerry's performance on each of the three dimensions of
the mission statement?
Yes, Ben & Jerrys fulfilled its product, economic and social mission statements. Start
with working on social mission, once Ben & Jerrys chose to face an unnecessary risk that
they let a low-productivity nonprofit religious institution to supply their brownies order. The
unmatched productivity caused them to had 50-pound blocks of brownie, fortunately they got
a creative way to compromise the situation where they innovated a new flavor which
matched with product mission for making, distributing, and selling the finest quality allnatural ice-cream and related products in a variety of innovative flavors and style made from
Vermont dairy products. And at the last, Ben & Jerrys financial statements proved its
financial and profitable growth, where in the period of 1994 to 1999, the ROA went up from
1.4% to 3.5% and the ROE went up from -2.6% to 8.9%.

IV.

How did Ben & Jerry's become a takeover target?

The unbalance of 45% market share in the industry compare to low financial strength and

growth, causing a significant sign of underperform and investors dissatisfaction which then
tempted competitors to giving offer to the hungry investor.
V.

Do you think the current takeover offers are justifiable? What might Ben & Jerry's
be worth to bidder?
Henry Morgan, one of the member of the board of director of Ben & Jerrys Homemade,

summarized the offers as follows:

Bidder

Offering Price

Dreyers Grand

$31 (stock)

Mail Proposal

Maintain B&J management team

Operate B&J as a quasi-autonomous business unit
Encourage some social endeavors
Unilever
$35 (cash)
Maintain select number of B&J management team
Integrate B&J into Unilevers frozen dessert division
Restrict social commitments and interests
Meadowbrook
$32 (cash)
Install new management team
Lane
Allow B&J to operate as an independent company
controlled under Meadowbrook umbrella
Maintain select social projects and interests
Chartwell
Minority
Install new management team
interest
Allow B&J to continue as an independent company
Assessing the offers, the highest offer price bidder is Unilever; concerning management
control, Dreyers Grand is about keeping it; but all offers has a strict social commitment. Ben &
Jerrys is worth for the bidder mostly because its huge market share in ice-cream industry and its
strong brand image.

VI.

Should Henry Morgan defend the agenda of the current management team or
support one of the acquisition offers?
Concerning shareholders interest, Morgan should support the takeover based on the
purpose to maximize shareholders value, where the current situation is the company is
underperforming by focusing too much on social commitment, and having a high spending
cost that decrease shareholders value.

VII.

Who ultimately controls the assets of Ben & Jerry's? In general, how are assets
allocated in a free-market system?
In the case of Ben & Jerrys, ultimate assets control was limited through the companys
charter, differential stock-voting rights, and a supportive Vermont legislature. In 1997 annual
meeting, Ben & Jerry shareholders approved amendments to the charter that board has more
power to determine the firms mission and the board is divided into three classes for three
years term, any removal of a director will require a 2/3 majority. By setting 3 different equity
classes, which 1 Class A common is coming with 1 vote share, 1 Class B common is coming
with 10 vote shares, and there is special voting right for Class A preferred holder. The
Vermont legislature gave the authority to board of director of a firm to consider the interest of
the firms stakeholders when determining whether an acquisition offer or other matter was in
the best interest of the firm which biased the board of director of Ben & Jens
In free market, the economics system is free from government intervention and solely
depends on the market. And asset allocation strategy will be focus onto disperse invested fun
in order to reduce risk and maximizing the return.

VIII.

What is the impact of the asset-control devices used by management and the state of
Vermont?
The impact of those are making board of director, especially Cohen and Greenfield, have
an ultimate control offer the company even to against the others shareholders on getting more
value in Ben & Jerry.

IX.

Do you support the use of such control restrictions?

Over control restriction is not recommended for any firm, by the cause direct goal of
shareholders could be easily restricted by personal ambition and mistake

X.

Support