UV0274
Rev. May 1, 2015
Ben & Jerry’s Homemade
Teaching Note
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, students may review management’s performance, estimate the
economic cost of current management practice, and evaluate the implications of takeover defense strategies.
Ultimately, students 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.
The case provides opportunities for the instructor to develop any of the following teaching objectives:
Establish the importance of financial performance for a firm in a public capital market.
Stimulate an appreciation for the tension regarding asset control among corporate stakeholders.
Evaluate the role of corporate takeovers and the merits of takeover defenses.
Introduce corporate valuation using investor multiple measures.
The case requires relatively little prior knowledge of finance, and it largely provides a stimulating introduction
to the principles of a traditional corporate finance curriculum.
Sample Student Study 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?
3. Do you think the current takeover offers are justifiable? What might Ben & Jerry’s be worth to the
bidders?
, Page 2 UV0274
4. Should Henry Morgan defend the agenda of the current management team or support one of the
acquisition offers?
Suggested Supplementary Readings
This case introduces many of the fundamental principles of corporate finance. Little prior knowledge or
supplementary reading on the part of students is required. Instructors may consider reading Cohen and
Greenfield’s Ben & Jerry’s Double-Dip, published by Simon and Schuster, as it provides a fascinating and
entertaining review of the development of Ben & Jerry’s Homemade and its founders’ business philosophy.
Hypothetical Teaching Plan
1. What decision does Morgan face?
The members of the board must choose either to defend the ongoing agenda of the current management
team or to encourage a change in asset control by supporting an outside takeover offer. Because most of the
board members are part of the management team and Morgan has been associated with the founders for
some time, a vote for a change in control is likely to be hard to make. As a member of the board, Morgan
does have a fiduciary responsibility to his shareholders. If the case is used as a course opener, the instructor
may find it attractive to avoid the details of the various offers by focusing on the highest and, arguably, the
most interesting offer, the Unilever offer of $36 in cash. The instructor can close this discussion with a class
vote on the Unilever offer.
2. How did Ben & Jerry’s become a takeover target? Hasn’t Ben & Jerry’s been successful in fulfilling its mission
statement? Would you support a takeover?
The objective of this portion of the discussion is to establish that, at first pass, Ben & Jerry’s appears to
have been successful across all but the financial dimension. The instructor may begin by asking students to
summarize Ben & Jerry’s mission statement. The instructor can then survey the class by asking students to
grade management on its performance across corporate objectives. The grades become management’s report
card. Generally, students give management good marks on the product and social objectives (A’s and B’s) and
less favorable grades on the economic objective (C’s and D’s). Students should be asked to defend their
evaluations. Providing some support for this view of Ben & Jerry’s financial performance can be the stock
market performance, return on equity (ROE) and return on assets (ROA) (relative to comparables and risk-
free debt yields), and comparable investor multiples, as well as the takeover offers. The instructor may
emphasize the point by discussing Ben & Jerry’s strong performance relative to other stakeholders (e.g.,
suppliers, employees, management). The conclusion is likely to be that Ben & Jerry’s management has
received straight A’s for all but its financial performance. The instructor can close with a class vote on the
takeover decision.
3. What evidence is there that investors are dissatisfied?
The instructor can gather evidence from those who believe that Ben & Jerry’s financial performance is
poor. Such evidence includes poor operating returns (ROE, ROA), poor cumulative stock returns, and low
investor multiples. One theme that could be introduced is the notion of benchmarks. The only way to state
Rev. May 1, 2015
Ben & Jerry’s Homemade
Teaching Note
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, students may review management’s performance, estimate the
economic cost of current management practice, and evaluate the implications of takeover defense strategies.
Ultimately, students 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.
The case provides opportunities for the instructor to develop any of the following teaching objectives:
Establish the importance of financial performance for a firm in a public capital market.
Stimulate an appreciation for the tension regarding asset control among corporate stakeholders.
Evaluate the role of corporate takeovers and the merits of takeover defenses.
Introduce corporate valuation using investor multiple measures.
The case requires relatively little prior knowledge of finance, and it largely provides a stimulating introduction
to the principles of a traditional corporate finance curriculum.
Sample Student Study 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?
3. Do you think the current takeover offers are justifiable? What might Ben & Jerry’s be worth to the
bidders?
, Page 2 UV0274
4. Should Henry Morgan defend the agenda of the current management team or support one of the
acquisition offers?
Suggested Supplementary Readings
This case introduces many of the fundamental principles of corporate finance. Little prior knowledge or
supplementary reading on the part of students is required. Instructors may consider reading Cohen and
Greenfield’s Ben & Jerry’s Double-Dip, published by Simon and Schuster, as it provides a fascinating and
entertaining review of the development of Ben & Jerry’s Homemade and its founders’ business philosophy.
Hypothetical Teaching Plan
1. What decision does Morgan face?
The members of the board must choose either to defend the ongoing agenda of the current management
team or to encourage a change in asset control by supporting an outside takeover offer. Because most of the
board members are part of the management team and Morgan has been associated with the founders for
some time, a vote for a change in control is likely to be hard to make. As a member of the board, Morgan
does have a fiduciary responsibility to his shareholders. If the case is used as a course opener, the instructor
may find it attractive to avoid the details of the various offers by focusing on the highest and, arguably, the
most interesting offer, the Unilever offer of $36 in cash. The instructor can close this discussion with a class
vote on the Unilever offer.
2. How did Ben & Jerry’s become a takeover target? Hasn’t Ben & Jerry’s been successful in fulfilling its mission
statement? Would you support a takeover?
The objective of this portion of the discussion is to establish that, at first pass, Ben & Jerry’s appears to
have been successful across all but the financial dimension. The instructor may begin by asking students to
summarize Ben & Jerry’s mission statement. The instructor can then survey the class by asking students to
grade management on its performance across corporate objectives. The grades become management’s report
card. Generally, students give management good marks on the product and social objectives (A’s and B’s) and
less favorable grades on the economic objective (C’s and D’s). Students should be asked to defend their
evaluations. Providing some support for this view of Ben & Jerry’s financial performance can be the stock
market performance, return on equity (ROE) and return on assets (ROA) (relative to comparables and risk-
free debt yields), and comparable investor multiples, as well as the takeover offers. The instructor may
emphasize the point by discussing Ben & Jerry’s strong performance relative to other stakeholders (e.g.,
suppliers, employees, management). The conclusion is likely to be that Ben & Jerry’s management has
received straight A’s for all but its financial performance. The instructor can close with a class vote on the
takeover decision.
3. What evidence is there that investors are dissatisfied?
The instructor can gather evidence from those who believe that Ben & Jerry’s financial performance is
poor. Such evidence includes poor operating returns (ROE, ROA), poor cumulative stock returns, and low
investor multiples. One theme that could be introduced is the notion of benchmarks. The only way to state
