Asset Control
Ben & Jerry’s have been very much concerned about their interest in controlling the ice cream business and Ben & Jerry’s asset control was contingent to its corporate charter, in which Vermont legislation and different class of stock offered different voting rights to its holder.
Highlights of Key Issues
Acquisition Offers
Chartwell Investments
Chartwell Investments is also not attractive to Ben & Jerry's management because this offer will also change the entire existing management.
ben and jerry's case study solution
Dreyer’s Grand
Dreyer’s Grand offer is the third highest offering price for Ben & Jerry's, therefore, it does not maximize the value of Ben & Jerry's shareholders in short run, however, it offers to retain the existing management and in long run the third highest price, which is offered in the form of equity stock of Dreyer’s Grand can pay higher returns in future conditional to the future performance of Dreyer’s Grand and this offer can be seen as a good offer because Ben & Jerry's management owner wants to keep the control of their business and this offer will retain the control of business and they will be able to manage the business as well. Moreover, Dreyer’s Grand has also been providing community services, which will be in accordance with the Ben & Jerry's mission statement of offering community services, meanwhile, the offer price of $31 value stock is much lower that seems to be less attractive to shareholders of Ben & Jerry's and in share exchange, Ben & Jerry's will still be exposed to the risk of fall in post-merger share price of Ben & Jerry's as an autonomous operational unit of Dreyer’s Grand.
Meadowbrook Lane Capital
Meadowbrook Lane Capital is offering cash $32 per share of Ben & Jerry's, which is the second highest price but this offer will change the entire existing management that is undesirable for Ben & Jerry's. In the meantime, this offer will continue some of the social commitments; however, this offer will not be very much attractive to Ben & Jerry's.
Unilever
The highest offer available to Ben & Jerry's is cash payment of $36 per share of Ben & Jerry's, which offers a gain in short term and gains of Ben & Jerry's shareholders’ will be certain in the form of cash consideration. Moreover, Unilever offers to retain some of the current management of Ben & Jerry's, which undermines the importance of offer but the selected number of management team can influence the policies, meanwhile, Unilever will restrict the social commitments of Ben & Jerry's. However, the cash offering of $36 per share will give the highest premium to Ben & Jerry's existing shareholders.
However, the offers of Meadowbrook Lane Capital and Chartwell Investments would not be considered and the offers of Unilever and Dreyer’s Grand have their own pros and cons; which further needed to be evaluated on financial and non financial grounds and final decision would be made on the basis of shareholders’ value maximization and retention of existing management.
Financial Grounds
Merger with the larger company will bring more capital to Ben & Jerry's, which will help to expand its operation by using acquirers’ capital facilities. In the mean time, the combination of two companies will bring the advantage of economies of scale; which will save the cost and will bring synergy advantage, hence, the merger with large company will benefit Ben & Jerry's and will ultimately contribute to maximization of shareholder’s value and in terms of market capitalization, Unilever is the largest company with $18 billion of market capitalization in comparison with only $1 billion market capitalization of Dreyer’s Grand. Therefore, Unilever will be a better acquirer to accept its offer.
Non-Financial Grounds
Merger and acquisition will result in large business operations, which will give more buying power to Ben & Jerry's leading to the more competitive position of Ben & Jerry's in the ice cream market. For the meantime, the expertise of acquirer’s management will help to expand the business in a more efficient way and large retailers existing distribution channels will help Ben & Jerry's to reach international market through already established distribution channels of large acquirer. However, along other several fast moving consumer goods, Unilever was the world’s largest producer of ice cream and its offices were not only located throughout United States but it also had access to international market through its established distribution channels, whereas, Dreyer’s Grand was only offering ice cream direct-store delivery system, which made Unilever a giant in the ice cream market, therefore, Unilever’s offer would be more attractive......................................
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