Beruflich Dokumente
Kultur Dokumente
Prepared by:
Nur Afisha Yusuf Jennifah Nordin Safian Bujang Margaret Lucy Gregory
Leading distributor of super premium ice creams, frozen yogurts and sorbets Eating was their great passion- start business related to food i.e ice cream Started in 1978 in Burlington, Vermont Bought an old gas station as their first ice cream parlour Founders: Ben Cohen & Jerry Greenfield Initial investment of $12,000 ($4,000 borrowed)
After conducting a manual market search based on criteria such as warm weather and college kids, they found out that all the towns that match the criteria already have their own homemade ice cream parlour
Thus, throwing out the weather criteria, they end up in Burlingtonof whichhad a young population, a significant college population and virtually no competition
Increased competitive pressures and declining financial performance has triggered a number of takeover offers by a few companies namely Dreyers Grand, Unilever, Meadowbrook lane and Chartwell.
Cofounders Ben Cohen & Jerry Greenfield know that the companys social orientation requires corporate independence
But Chief Executive Perry Odak feels that Ben & Jerrys shareholders would be best served by selling out to the highest bidder
Dreyers Grand Offering $31 per share in stock Maintain B&J Management Team Operate B&J as a quasi autonomous business unit Encourage some social endeavors
The Offers
Unilever Offering $36 per share in cash Maintain select members of B&J Management Team Integrate B&J into Unilevers Frozen desserts division Restrict Social Commitments & interests
Meadowbrook Lane Offering $32 per share in cash Install new management team Allow B&J to operate as an independent company controlled under the Meadowbrook umbrella Maintain select social commitments & interests Chartwell Minority Interest Install new management team Proposed investment between $30 m to $50m (to become the majority shareholder)
Offers can be assessed in terms of : 1) Offer price (Unilever) 2) Management control issue (Dreyers Grand) 3) Maintaining social commitment issue (Limited social commitment)
Analysis of B & J mission statement i. Product: Make, distribute & sell the finest quality, all natural products in a wide variety of innovative flavors made from Vermont dairy products
YES B & J able to meet its product mission statement
Threats rises in the cost of dairy products dieting habits of a health conscious generation slow economy in US impact on sales Major competitors such as Haagen Dazs, Nestle Pillsbury & Dean foods offer similar products
Based on the SWOT analysis, we say NO to the takeover offer based on the following ground:
The company is financially stable
E.g. debt asset ratio = 11% (1999)
Strong brand name Already have existing infrastructure Significant social commitment shown
Q 3: What evidence is there that investors are dissatisfied? Richard McCaffrey (a financial reporter) expressed the opinion of shareholders as follows: For years, despite of increase in sales and earnings, B & Js stock has maintain around same level i.e. $21 per share For them, the returns should be better because, apart from having a strong brand name, they also have acquired 45 per cent market share ( of super premium ice cream market) Furthermore, they are also successful in new product rollouts and business expansion
Cont
Though the ROE show an improvement i.e. 7% in 1998 from 5% in 1997, it is not enough for the shareholders Thats lousy by any measure
Q 4.1 : Who ultimately control the assets of Ben & Jerrys ? The assets of Ben & Jerrys is control by:
Corporate Charter Restrictions 1997 annual meeting-Ben & Jerry shareholders approved amendments to the charter as follows:i. Board have more power to determine the firms mission ii. Board divided into three classes for three years term iii. Removal of a director requires a 2/3 majority iv. Any vacancy to be filled by 2/3 majority v. The number of votes to alter, amend, repeal or adopt must acquire 2/3 majority
3 equity classes- Class A common( 1 share = 1 vote), class B Common (1 share = 10 votes) and class A preferred (share = special voting right)
In April 1998- Vermont Business Corporation Act was amended as follow:Directors are given the authority to consider the interests of the corporations stakeholders when determining whether an acquisition offer or other matter was in the best interest of the corporation.
Vermont Legislature
Asset allocation is a strategy to disperse invested fun in order to reduce risk and maximising the return
(Lightbulb PressDictionary of Financial Terms, 2008)
Free market is an economics system that is free from government intervention and solely depends on the market (Farlex Financial Dictionary, 2009) As for B & Js, the government i.e. Vermont Legislature gave the authority to B.O.D. of a firm to consider the interest of the firms stakeholders when determining whether an acquisition offer or other matter was in the best interest of the firm.
Based on the analysis of the data given, we believe that B&J still has a strong position in the market and the ability to secure long-term future profit
6. Should Morgan support the takeover? As the representative of the shareholders, Morgan should support the takeover based on the following: Too much focus on social commitment Low shareholders value High operational cost
Cont
At that time, Unilever had offered largest sum of money to acquired B & Js Not tempted by large sum of money, both B & J refused to sell that lead to them being sued by the shareholders
Acquisition of B & Js
B & Js was acquired by Unilever in 2000 How much???for $326 million
References
Asset Allocation, (2008). Lightbulb press dictionary of financial terms. Retrieved November 13, 2012, from http://financial dictionary. thefreedictionary.com/Asset+Allocation Free markete conomy (2009). Retrieved November 13 2012 from http://financial-dictionary. thefredictionary.com/Free+market+economy