Takeover whispers and dismay by the scoopfuls

February 02, 2000|By Debbie Price

Wall Street Blues. Sinfully rich ice cream packed with Wall Street nuts and laced with blueberry suits, um, syrup. One hundred percent more fattening. A real guilt trip for the socially conscious.

SOUNDS PRETTY icky, doesn't it? At least, a good number of the independent frachise-owners of Ben & Jerry's Ice Cream scoop shops think so. If Wall Street Blues were a flavor, they'd send it straight to the company's legendary Flavor Graveyard, where dearly departed treats are buried because, as the company's Web page puts it, "They were real bombs."

Unfortunately for the franchise-owners, Wall Street Blues is reality -- not ice cream.

Word on the Street is that the quirky, iconoclastic, socially responsible Ben & Jerry's is a takeover candidate. Among the rumored suitors -- the gigantic multinational food conglomerates Unilever N.V., owner of Good Humor-Breyers Ice Cream, and Diageo PLC, owner of Pillsbury and its Haagen Dazs brand.

Ben & Jerry's has reported "indications of interest." The whisper word is $30 a share for a stock that was trading in the $15 to $16 range in November.

Sinfully rich, indeed.

Franchise owners who fear that their beloved brand will be rendered soulless by corporate America spent the last weeks of January giving away free ice cream (single scoops) to customers who were willing to lobby Ben & Jerry's board of directors with nay-saying postcards. Their mantra: multi-flavors, not multinationals.

"We want to remain a Vermont-based, socially responsible independent company," says Richard Snow, who owns six scoop shops, including those in the Harborplace pavilion and the Gallery in Baltimore. "If the value of the stock were our only concern, we'd definitely be selling. But we believe other things are more important."

Savor the message

It's a message that resonates with B&J's almost cult-like following who relish Cherry Garcia as much for its homage to the Grateful Dead's Jerry Garcia as for its taste. Main Street (or off-off Main Street) fights Wall Street and wins. The funky little guy stays funky and little and manages to be successful while still giving away 7.5 percent of his pre-tax profits and paying too much for ingredients to help nonprofit bakeries.

It's a wonderful life. Take that, Gordon Gekko!

Hollywood would write a happy ending to the funky little guy's story. Wall Street will not. The Street is powerful and punishing. And little companies that turn down big offers have a way of becoming so little that they sometimes disappear altogether.

This is the dilemma facing the board of Ben and Jerry's, as well as founders Ben Cohen and Jerry Greenfield.

"If they don't care about the ultimate [stock] valuation, then they should be a private company," says Mitch Pinheiro, a food analyst at Janney Montgomery Scott in Philadelphia. "If they're a public company and they choose not to take this offer, then they're going to be valued like a private company."

Word of a possible sale sent Ben & Jerry's stock to almost $29 a share in early December, a dizzying height the company hadn't seen since 1993. The stock price has dropped back, trading yesterday at around $23 a share.

"If you look at the stock price," says Mr. Pinheiro, "it's been seven years of going nowhere. Why? Because they're coming up against some incredibly strong competitors, because the market is saturated and where do you go?" The food industry as a whole has been "stinko," in the parlance of brokerage houses. Large-cap food stocks were down, on average, 30 percent last year. Sluggish 4 percent growth -- contrast with technology's rocket ride -- and still relatively expensive stock prices have made the food group a "no man's land," for investors, as Mr. Pinheiro notes.

Learning from past

So what's a socially conscious, fiscally responsible board of directors to do when offered a 50-percent premium?

Take the money and run?

Not so fast.

The landscape of mergers and acquisitions is littered with the bodies of once-proud brand names. Quaker Oats' purchase of Snapple, a cute little homespun beverage, was disastrous for all involved. Analysts are quick to point out that Quaker Oats paid too much and then set about decimating Snapple's distribution system. Distributors rebelled. Profits tumbled. Ultimately, Quaker Oats sold Snapple.

And then there is the philosophy of Ben & Jerry themselves, writ large in their tome, "Ben & Jerry's Double-Dip: Lead with your values and make money too."

"We hope you'll see that it's possible to run a business in a way that proactively supports society and that -- you'll be just as profitable, if not more so," write Cohen and Greenfield, who were traveling and could not be reached for comment. (A very nice company spokesman said the company didn't have any comment.)

On the road

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