Case Digest - Finance

BA 141 CASE DIGEST

2011

Arevalo Casinillo Ceracas Joseco Payno

Case No. 2

I. EXECUTIVE SUMMARY Ben and Jerry’s Homemade, Inc., a leading distributor of super-premium ice creams, frozen yogurts, and sorbets, was founded in 1978 in an old gas station in Burlington, Vermont by Ben Cohen and Jerry Greenfield. For 13 years, it had been growing both in financial and social stature. The company is not only an industry leader in the super-premium ice cream market but is also known for its emphasis on socially progressive causes and community commitment. It has its tradition of generous donations of corporate resources like donating 7.5 percent of its pretax earnings to various social foundations and expressing customer appreciation with an annual free cone day at all of its scoop shops. Ben and Jerry further extended their generosity by offering 75,000 shares at $10.50 per share exclusively to Vermont residents, so that they may help those who first supported the company and so that residents will profit from their venture as well. The mission statement of the company comprised of social, product and economic missions have been used to facilitate the business practices, behavior, ideology and principles of the company. For Ben and Jerry’s, asset control was limited through elements of the company’s corporate charter, differential stock-voting rights, and a supportive Vermont legislature. Increased competitive pressure and Ben & Jerry’s declining financial performance had triggered a number of takeover offers for the company. These offers came from Dreyer’s Grand, Unilever, Meadowbrook Lane, and Chartwell, each with their offering price and main proposal. In order to reach to the final decision, our group did the BCG matrix, SWOT analysis, and computed for the sustainable growth rate and some financial ratios. At the end of the day, the decision is to accept Unilever’s offer and impose a counter proposal of maintaining the company’s social image. Furthermore, the...