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Ben & Jerry's sweet talk
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March 29, 2000: 6:20 p.m. ET
Ice cream maker cautions reports of the firm going private are premature
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NEW YORK (CNNfn) - Novelty ice cream maker Ben & Jerry's Homemade Inc. confirmed Wednesday its board has held discussions with Meadowbrook Lane Capital and European concern Unilever about taking the company private, but a number of "unresolved issues" stood in the way of the transaction.
In a shortly worded statement released Wednesday morning, the South Burlington, Vt.-based company said its board met last Thursday with co-founder Ben Cohen and representatives from both Meadowbrook and Unilever, the Anglo-Dutch consumer goods giant, about taking the company private, but could not come to an agreement.
"There can be no assurance that these issues will be resolved or that such a transaction will, in fact, be approved by the Board," the company said.
 The release came in response to a New York Times article Wednesday quoting an unnamed company shareholder, who said the company would announce as early as Friday that it was going private in a $38 per share deal, a transaction that values the company at approximately $262.6 million.
The Times piece said current Ben & Jerry's co-founder Ben Cohen would control 36 percent of the company under the transaction. Meadowbrook Lane, a group of investors that claims interest in socially responsible issues, would hold a similar stake, while Unilever, the owner of Breyers and Good Humor ice cream, would own a 28 percent stake, the report said.
Strangely absent from the mix is co-founder Jerry Greenfield, the second half of the duo that first sold Ben & Jerry's ice cream out of a renovated gasoline station in Vermont 22 years ago.
Keeping charitable goals intact
Analysts largely praised the possible transaction as a sweet deal for Ben & Jerry's, whose stock price has melted the past two years, despite strong revenue and earnings growth.
"I think what was reported today represents a very attractive deal to the shareholders, and would also be a very attractive deal to Ben Cohen, who owns 40 percent of the company, and to the consumers," said Jim Barrett, an analyst with Josephthal & Co. Inc.
The fate of Ben & Jerry's, makers of such popular flavors as Cherry Garcia, Chocolate Chip Cookie Dough and Phish Food, has been in question since late last year, when founders Cohen and Greenfield announced the company had received takeover queries from several suitors.
Among those that reportedly expressed interest were Dreyer's Grand Ice Cream (DRYR: Research, Estimates), Unilever, Nestle, Britain's Diageo PLC and Italy's Roncadin.
Word of a possible deal sparked an outcry of opposition from the company's most hardcore fans, who claim the company's well-publicized charitable efforts would evaporate under new owners. True to its hippie roots, Ben & Jerry's donates 7.5 percent of its profit every year to socially responsible causes.
Franchisees fears put to rest
Ben & Jerry's franchisees, who are among those who have the strongest feelings about the company's social mission, expressed deep relief on Wednesday about the reported deal.
"This really put our fears to rest," said Lori Johnston, owner of two Washington D.C. Ben & Jerry's franchises. "We hope it means the social mission is going to remain intact."
Like the company itself, the franchisees donate a portion of their sales, at least 2 percent, to local charities. In some cities, Johnston said, Ben & Jerry's stores are major forces of good in their local communities. In her case, she donates playground equipment, through a partnership with a group called Ka-Boom, to parks in Washington D.C.
Johnston said the franchisees feared their own charitable work would be sacrificed if the company were to be taken over completely by Unilever because the company is not "values-driven." At the first news of a possible sale, franchisees staged huge protests against the possible takeover.
They do not, however, object to Unilever's stake in the company. Johnston said the franchisees hope Unilever will help the company iron out the distribution problems it has had in the past. "It was a wise decision to bring them in," she said. "For the company to be able to stay successful they need supermarket shelf space."
The white knight
The company seemed to have found a white knight of sorts in Meadowbrook, a Northampton, Mass.-based investment group that includes several members of San Francisco-based Social Venture Network, a non-profit group that advocates socially sensitive investing, and Robert E. Barton, CEO of Catalyst Financial Group Inc., a small investment bank specializing in environmental friendly investments.
 Published reports said Meadowbrook offered $32 a share for the company in early February, only to later be trumped by a $43-per-share offer from Unilever. Cohen reportedly brokered the compromise that would allow him to retain control of the company, maintain its charitable efforts and tap the business expertise of a well-known packaged goods company.
"I think this is a pretty innovative solution," said John Montgomery, portfolio manager of the Bridgeway Social Responsibility Fund, which owns several thousand Ben & Jerry's shares. "There are a lot of things you can do as a private company that you can't as a public one."
The fact that Unilever has stayed involved in the deal is an encouraging sign for shareholders and investors alike, particularly given Cohen was likely to increase the company's charitable donations in lockstep with its earnings growth, Barrett said.
"With the addition of Unilever, the company has the potential to become more profitable and increase its charitable donations," he said.
Ongoing speculation has fueled some momentum in the company's stock that it has lacked for some time. Ben & Jerry's (BJICA: Research, Estimates) shares were up more than 20 percent since the beginning of the year heading into Wednesday's trading.
Confirmation of the ongoing talks with Meadowbrook and Unilever sent the company's shares soaring again Wednesday, although shareholders clearly left some wiggle room in case the deal fell through. The stock closed the day up 4-13/32 to 34-3/8. 
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