Finance – Ben and Jerry’s Case
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1. Do you agree with Ben & Jerry’s current mission statement? Why or why not? The Ben and Jerry’s Mission Statement is a bit contradictory, as their economic point stresses raising value for the shareholders, meanwhile they are in the business of distributing 7.5% of their pre tax earnings to social foundations and community action groups. The product point can work in conjunction with the social and economic aspects, but the points about social responsibility and maintaining profitable growth is difficult to achieve.
2. 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? Product: Ben and Jerry’s product has been well received is the major reason the company has been successful. Their unique flavors such as Chocolate Fudge Brownie are innovative within the ice cream industry. Economic: The Company has not been very successful in their efforts to maintain profitable growth. The share price has remained relatively flat, and the graph on exhibit 2 shows that investors would have been better off investing in an index tracking fund for the s and p 500 than investing in ben and jerry’s stock.
Spoos tries to mimic the overall U.S market using a sophisticated weighting system. They have however managed to grow their sales at a relatively consistent basis over the past 6 years. Sales have grown at an average of 10% per year since 1994, and grew 13% in 1999. Social – Ben and Jerry’s Emphasis on social aspects has been impressive. Returning 7.5% of pre tax profits to the community and using their product to provide sustainable growth in Brazil nut and cashew industry.
3. Can Ben & Jerry’s be excellent in all three dimensions of the mission statement? What objective is most important? Ben and Jerry’s can be excellent in all three dimensions of their mission statement if they find the correct balance between their economic, social and product goals. If they can manage to find an optimal way and ratio to donate pre tax earnings to charitable causes that results in a tax credit that effectively eliminates corporate income tax, they would be able to achieve their economic goals in the interest of their shareholders as well as their social sustainability goals.
4. Who should have the right to control the assets of Ben and Jerry’s? According to exhibit 5 , Ben Cohen should have the right to control the assets of the company as a result of his 60.9% interest in class B common stock.
5. How did Ben & Jerry’s become a takeover target?
As a result of a prior distribution agreement, Pillsbury and Dreyers (Competitors) became responsible for the distribution of the majority of Ben and Jerry products. Ben and Jerry’s responded by trying to establish joint venture agreements with Dreyers and Unilever. These talks broke down, likely as a result of unilever and Dreyers seeing value in owning all of ben and jerry’s assets or a lack of understanding regarding the management structure, and the merger talks turned into takeover offers.
6. What might Ben & Jerry’s be worth if its mission was purely economic? Ben and Jerrys is likely worth in the neighborhood of 32-26 dollars per share, which is the value that the other companies have placed on it. This represents a substantial premium over the current market price of 21 dollars per share. Anywhere from a 52% to 71% premium could be placed on the stock over the current market price.
Should Morgan support a takeover? If so, which offer should he recommend pursuing? If not, what are the wealth implications for Ben & Jerry’s shareholders? In terms of what will be best for the share price, I Dreyer’s deal will be the best for ben and jerry;s as well as their shareholders. The Dreyers deal will allow them to continue to pursue select social endevors, and this is likely an important thing for large portions of B and J’s shareholders. Socially conscious consumers and investors might be put off by the unilever deal or meadowbrook deal.