• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Ben & Jerry's needs resolution to the following issues: How did Ben & Jerry's become a takeover target? Should Morgan support a takeover?

Extracts from this document...

Introduction

Ben & Jerry's Problem Statement Ben & Jerry's needs resolution to the following issues: * How did Ben & Jerry's become a takeover target? * Should Morgan support a takeover? > If so, by who, and at what price? > If not, why not? If the company is not generating value for its shareholders consistently, it might consider the various takeover-offers on the table. To evaluate this we need to consider impacts on the company's ability to operate independently to carry out the threefold corporate mission (Product, Economic and Social). This document will offer both detailed analysis to evaluate this problem and recommendations for moving forward. Current Financial Analysis With the formation of ice-cream joint venture by Pillsbury and Nestle, Pillsbury distribution channel was no longer advantageous for Ben & Jerry's. Despite the 45% market share in super premium ice-cream market and the great brand equity, the company has been consistently under-performing and its share price has not seen any changes from its current price of $21. ...read more.

Middle

Company Valuation and Share Price Ben & Jerry's net income has been on the rise (from 59% to 93%) but the cost-to-sales ratio has decreased from 65% in 1998 to 61% in 1999, accrediting some of the increase in net income to the reduction in cost. Although one can argue that if the company is making profits then why sell it but it's worthwhile to notice that the working capital has been declining which means reduction in future sales. Company's total assets have been almost the same ($150M) for the past two years indicating a very slow expansion [See Exhibit 3]. For this reasons it seems to be a good option to sell the company to one of the interested candidates. Getting financing from investors to expand will not be a good move, as this would not change the management priorities and its social interests. Based on the multiples valuation method, Ben & Jerry's share price is evaluated to be $33.04 [See Exhibit 4]. The offer price of Unilever is well above the valued price. ...read more.

Conclusion

board members from Chartwell * Install new management - loss of valuable members * No social interests Exhibit 2 - Quantifying the takeover offers Dryer's Unilever Meadowbrook Chartwell Management Autonomy 3 5 5 5 Offer Price 3 5 4 3 Change Priorities 3 5 5 4 Reorganization 2 5 3 3 Community Service 4 4 4 3 Total 15 24 21 18 Exhibit 3 - Ben and Jerry's Financial Performance Exhibit 4 - Multiples model used to calculate share price Inputs Current Share Price $21 Total shares outstanding 7,562,221 Price/Earnings Price/Book Price/Sales Dreyer's Grand 47.2 7.8 0.5 Eskimo Pie 30.7 1.1 0.58 TCBY Enterprises 12.5 1.2 2.5 Yocream International 9.4 1.8 0.7 Ben & Jerry's 13.2 1.7 0.67 Average 22.6 2.72 0.99 Measures of Ben & Jerry's Sales $237,000,000 Net Income (earnings) $12,000,000 Book value of equity $89,400,000 Per Share xMultiple Implied Price Sales per share $31.34 0.99 $31.03 Net income per share (EPS) $1.59 22.60 $35.93 Book value of equity per share $11.82 2.72 $32.15 Implied Price Average $33.04 Value of Equity $249,833,095 Sources 1 US Securities and Exchange Commission: http://www.sec.gov/cgi-bin/srch-edgar 2 Investment research site: http://www.morningstar.com/ ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Structures, Objectives & External Influences section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Structures, Objectives & External Influences essays

  1. Marked by a teacher

    ASDA's Ownership

    4 star(s)

    started to go to another one across the road, the pub owners are more likely to wonder why have they going to another pub? The sales are reflected on the change of business. If more and more people went to another business and left one alone, that business that was

  2. Introduction to J Sainsbury plc

    Sainsbury's being the third most popular supermarket chain in the UK league table means that some decisions are not working. The leader of Sainsbury's makes all of the decisions and people like to work for a strong leader, but some people may feel annoyed that they do not have a chance to have their own say.

  1. External influences on business. At ASDA we have to follow the following employment legislations ...

    our customers will not be borrowing money from the banks and will therefore not have to pay any interest. By paying more interest customers will have extra money to spend on our luxury items which we at ASDA sell in different types of goods.

  2. Business report on J Sainsbury's.

    One of the reasons why J Sainsbury's is a "plcs" because the business will have: o Access to more share finance (can sell shares to the greater public) o Greater status (perceived as bigger and more successful than Ltds) o Higher public profile (likely to get more media coverage)

  1. Identifying the customer needs at marks and Spcner

    For example, if Marks and Spencer's were marketing a product which is a type of Southern Asian food then they would have to test the product in Southern Asia. Marks and Spencer's use test market when launching a new product.

  2. Interpretation of Financial Statements.

    To find this ratio, we must strip out the part of the profit that "belongs" to the lenders (the interest) and also that owing to the Inland Revenue (the tax), leaving the profit that is solely attributable to shareholders. Note that this profit figure is before dividends, as both dividends

  1. Explain the ethical issues H & M needs to consider in its operational ...

    For existing production and sales markets, H&M will regularly evaluate human rights related risks and conduct human rights impact assessments on high risk markets. Risk and impact assessments are used for them to identifying actual and potential human rights impacts from their business activities, which are then managed by the relevant business functions.

  2. Report. It compares Unilevers and Nestle responses to pressures to reduce their carbon footprint. ...

    ________________ Table 1. Types and benefits of long term mutually beneficial relationships Type Benefits Communication regular newsletters (printed, email); annual reports e.g. review, sustainability, environmental impact; publicising the strategic plan; periodic updates regarding key developments; circulation of publications or publications list; website; and articles in sector press or local newspapers.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work