Ben& Jerry Homemade

BEN & 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. The case provides a unique opportunity to discuss fundamental firm objectives and the implications of poor financial performance as it reviews the development of Ben & Jerry’s strong social consciousness and the takeover defense mechanisms that maintain management’s control of company assets. Taking the role of an outside board member, the group may review management’s performance, estimate the economic cost of current management practice, and evaluate the implications of takeover defense strategies. Ultimately, the group must take a position on whether the board should defend the agenda of the current management team or accept one of the takeover offers and support a shift toward a more traditional orientation. Suggested Questions 1. 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? 2. How did Ben & Jerry’s become a takeover target? What evidence is there that investors are dissatisfied? Who ultimately controls the assets of Ben & Jerry’s? In general, how are assets allocated in a free-market system? 3. Do you think the current takeover offers are justifiable? What might Ben & Jerry’s be worth to the bidders? 4. What is the impact of the asset-control devices (anti-takeover defenses) used by management and the state of Vermont? Do you support the use of such control restrictions? 5. Should Henry Morgan defend the agenda of the current management team or support one of the acquisition offers?

BEN & JERRY’S HOMEMADE Common Takeover Defenses Pre-offer Defenses Type of Defense Supermajority Description Merger approval requires abnormally high percentage of votes, usually 80%. Firm issues a new class...