Ben & Jerry's Homemade

Case 3, Ben and Jerry’s Homemade

The Ben & Jerry’s Homemade stock price was $21 per share. This company developed from niche market in a small town to mass market appeal, even expanding its market scale to international level. Compared with the bid prices, it seems fair for both seller and buyer.

If we look at the Exhibit 2, we can learn that Ben & Jerry’s Homemade stock price was much lower than the stock price of the industry. However, Ben & Jerry’s Homemade is a company which has great brand name and possesses 45% share of the super-premium ice cream market. One major reason why the return was not as good as the shareholders expect was and ironclad part of corporate culture. Ben and Jerry have done a lot of commitments for the society to gain a good reputation and social gains, but this action is irrelevant with interest of shareholders, whose motivations are to maximize their value. Failing to meet shareholders’ requirement will absolutely dissatisfy them, so Ben and Jerry need to pay more attention to large its transaction and maximize the profit.

Among the bidders, Unilever provides the highest price, which should be elected by management assuming they stand at the point of shareholders. Unilever will maintain select members of B&J management team and integrate B&J into Unilever’s frozen desserts division. The company’s ice cream division was the largest producer of ice cream in the world. Being one of the members of Unilever will give B&J huge advantage to improve its management and profit process. However, in Unilever’s proposals, there is a divergence with Ben and Jerry’s willingness, which is that Unilever will restrict social commitments and interests. This undoubtedly departs from the purpose and mission of Ben and Jerry. All of these changes will lead B&J into another way which is different from its original management philosophy. As for Unilever, acquiring B&J’s making itself become more competitive advantages. So as a matter of fact both companies will increase their stock price, revenues, and decrease competition.

As for Dreyer’s Grand Ice Cream offer, obviously it is lower than other two known offers, but there are many motivations to consider. Dreyer’s has been in the premium ice cream business for years and has the same target market with B&J. Working together will make both two companies more competitive within this industry. A big favor for Ben and Jerry is that Dreyer’s also pay attention to social service activities, somehow these two share the same concept of social endeavor. With the takeover, Dreyer’s would operate Ben & Jerry’s as a quasi-autonomous business unit and maintains the current management team.  While this would allow B & J to continue pursuing their corporate objective and still keep some controls in the process. In this deal, they will increase shareholders’ value by a small amount. Probably, shareholders will not be happy with a small change.