Ben & Jerry’s co-founders say Unilever violated merger agreement

Ben & Jerry's Chubby Hubby ice cream

Courtesy of Ben & Jerry's

Dive Brief:

  • Ben & Jerry’s co-founder Ben Cohen said in an MSNBC interview Sunday that by selling its Israeli operations to a licensee that would market its products in the Israel-occupied West Bank, parent company Unilever has “usurped their authority” by going against the wishes of Ben & Jerry’s independent board. Cohen said it “can’t allow that to happen, we can’t sit idly by.”
  • The ice cream brand has said it will amend its lawsuit about the divestment against Unilever in federal court in Manhattan, which it may do until Sept. 27, according to court records.
  • The independent board of Ben & Jerry’s, which controls social responsibility matters, was formed as part of its merger agreement with Unilever. The Vermont-based brand regularly advocates for causes such as ending modern slavery and the Black Lives Matter movement.

Dive Insight:

The unique deal struck when CPG giant Unilever purchased the ice cream maker known for its progressive political stances is likely to be put to the test if the Vermont-based company amends its lawsuit.

Based on Unilever’s purchase agreement with Ben & Jerry’s, Unilever decides who should be the ice cream brand’s CEO. But that CEO must defer to Ben & Jerry’s independent board about the “social responsibility aspects of the company,” Tulane University Law School professor Ann Lipton told the New York Times. Unilever also can only appoint two of the 11 seats on the brand’s board, the outlet noted. Shareholders of publicly traded companies usually vote to decide board members.

The social responsibility aspects of that deal, specifically the independent board’s power, are what Cohen and co-founder Jerry Greenfield said was the bedrock of the purchasing agreement. The 2000 deal filed with the Securities and Exchange Commission as part of Unilever’s acquisition of the ice cream company stated the parties agreed “the Surviving Corporation Board will have primary responsibility for preserving and enhancing the objectives of the historical social mission of the Company as they may evolve from time to time consistent therewith.”

“In order for us to sell the company, it was essential that we had this agreement in place, and without that agreement, the sale never would have occurred,” Greenfield said on MSNBC.

Unilever has maintained it has the right to make operational decisions for the ice cream brand. Unilever didn’t respond to a request for comment on Cohen and Greenfield’s televised interview.

Ben & Jerry’s asked a federal court to stop Unilever from selling its Israeli business in July, claiming that Unilever’s arrangement to market its products in the West Bank would cause irreparable harm to its social mission among consumers. U.S. District Judge Andrew Carter in New York denied the request, ruling the purported harm was “too speculative.”

Ben & Jerry’s did not respond to a request for comment.

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