Question

Ben and Jerry's Homemade: This case examines issues of asset control for Ben & Jerry's Homemade, Inc., in light of the outstanding takeover offers by Chartwell Investments, Dreyer's Grand, Unilever, and Meadowbrook Lane Capital in January 2000. We can observe the fundamental firm objectives expressed in the company's mission statement and the company's development of a strong social consciousness; but we might question the implications of poor financial performance combined with takeover defense mechanisms to protect management's control of company assets. Should the board defend the agenda of the current management team or should it accept one of the takeover offers?

Study Questions Case 3: Ben & Jerry's Homemade, Inc.
1. What evidence can you provide regarding its financial performance?
3. Why did Ben & Jerry's become a takeover target?
4. Who ultimately controls the assets of Ben & Jerry's?
5. What is the impact of the asset-control devices used by management and the state of Vermont?
6. What other common takeover defense strategies (both pre-offer and post-offer) could be employed?
7. With respect to the takeover offers currently on the table, are the offer prices high enough?
8. Should the board defend the agenda of the current management team or should it accept one of the takeover offers?

Answer 1

The board should accept the offer as it will increase the shareholders intetest.  

1. The financial performance can be proved through its financial statements. The financial statements provides information about the financial and profitability growth. The return on equity goes up from - 2.6% to 8.9% from year 1994 to 1999.

3. The market share in the industry was unbalanced i. e., 45% as compared to low financial power, strength and growth which results in the underperformance and the dissatisfaction among the investors which redults in giving the offers to the hungry investors by the competitors . ..

4.The ultimate control of the assets of Ben & Jerry's was limited to company's charter, differential stock voting rights and supportive vermomt legislature.  

5.The impact of assets control device used by management and state of Vermont are making Board of Directors (BOD) which have an ultimate control and offer the company against other shareholders as on getting the more value in Ben & Jerry.  

6. Defense strategies

SUPER MAJORITY : A corporate amendment made in company’s charter whicg require a large majority of the shareholders to approve important charge such as merger. .

STAGGERED BOARD : It is a board that is made up of different classes of Directors.  

POISION PILL: It is atactic utilized by the companies to prevent the hostile takeover..

LIABILITY RESTRUCTURING : The method which is used by thr company in order to get some advantage with outstanding debt to alter the terms of debt agreements.  

7. When we assess the the offer the Unilever is the highest offer bidder with $ 35 (cash) . Its huge market share in ice cream industry and its strong brand image. The offer prices are not high enough but it is underperforming and when we see that side, the prices are high enough.  

8. If we see the shareholders interest, the board should accept the takeover offers as it will increase the shareholders value wheras in the present situation the value is low and the company is underperforming.