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Executive Summary: Ben & Jerry’s should not accept any of the offers and should renegotiate with Dreyer’s and Unilever for a price range between $44.96 and $59.78 per share in cash because Ben & Jerry’s stock is undervalued. If renegotiation works, Dreyer’s is preferred. Henry Morgan should also press on maintaining the current management team which will help Ben & Jerry not to drastically change the organizational culture and maintain its social objective.
Ben & Jerry is a leader in superior premium ice cream market, holding 45% market share. The declining financial performance over a decade and inability to balance all three mission statements made the company to think about the takeover offers.
Ben & Jerry’s mission statement includes product, economic and social dimensions. In the pursuit of fulfilling its social orientation, Ben & Jerry sacrifice its economic objective of maximizing shareholder wealth. This gives rise to agency conflicts between the shareholders and the managers. Below is the analysis of the three mission statements:
Product: Ben & Jerry has successfully aligned its business operations to manufacture and supply premium quality ice-cream. The increase in prices instead of compromising quality due to rising prices of milk and sugar (raw materials for ice cream) shows Ben & Jerry’s commitment to maintain high quality product.
Economic: Ben & Jerry has not been able to maximize shareholder value as compared to its competitors. There are several evidences in the case to support this analysis:
* Ben & Jerry’s shares have underperformed relative to S&P 500 over a decade.
* Low ROA and low asset turnover ratio shows low asset utilization by the company in generating revenues
* It’s ROE is sometimes lower than the risk free rate, which weakens investors’ incentive to invest. The higher ROE in 1999 may be attributed to high net income after taxes due to asset...
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