Unilever buys Ben & Jerry's for $326m

Nigel Cope
Thursday 13 April 2000 00:00 BST

Unilever, the Wall's ice cream and Flora margarine group, strengthened its brand portfolio yesterday when it paid $2.6bn (£1.6bn) for two of America's best known consumer names.

The bigger deal saw Unilever pay $2.3bn (£1.4bn) cash for the SlimFast Foods Company, which makes health drinks and nutritional food products such as energy bars.

But this was overshadowed just hours after completion when Unilever struck a $326m agreed deal to buy the quirky ice-cream maker Ben & Jerry's Homemade.

Ben & Jerry's has become famous around the world for its commitment to social principles and its unusually-named flavours, such as Chunky Monkey and Cherry Garcia. These will be added to Unilever's Wall's ice-cream brands, which include Magnum and Solero.

The takeover means two of the world's leading premium ice-cream names will be under British control; Haagen-Dazs is part of Diageo, the food and drinks group that owns Guinness and Burger King.

Ben & Jerry's was founded by "hippy capitalists" Ben Cohen and Jerry Greenfield in a converted petrol station in Vermont in 1978. But the company has been the subject of takeover speculation in recent weeks after suggestions that the founders had fallen out.

A buy-out deal backed by Ben Cohen and Body Shop founder Anita Roddick was rejected by the board. This left Unilever free to make a $43.60-a-share cash offer.

Commenting on the deal yesterday, the two founders said: "Neither of us could have anticipated 20 years ago that a major multinational company would some day sign on, enthusiastically, to pursue and expand a social mission that continues to be an essential part of Ben & Jerry's... But Unilever has done just that."

Unilever said the founders would have no operational role in the company but would stay on to oversee its social mission and brand integrity. The group stressed it was "determined to nurture" Ben & Jerry's commitment to community values, and this should extend to Ben & Jerry's commitment to donate 7.5 per cent of profits to social causes. However, Unilever was unable to give a categoric assurance.

Ben & Jerry's recorded profits of $13.5m last year on sales of $237m. About 90 per cent of its sales are in the US. Unilever said it would use its distribution network to develop the brand in other markets.

The City applauded the deals, with Unilever shares rising 19.75p to 431.25p. Analysts said Ben & Jerry's gave Unilever a foothold in the "super premium" category of ice cream in the US.

The SlimFast deal was considered "expensive", said some analysts. However, Unilever said SlimFast controls 45 per cent of the $1.3bn US market for nutritional supplements and weight management.

SlimFast recorded profits of $125m on sales of $611m last year. In the UK the brands are only available in Boots and health food shops, but Unilever intends to extend distribution to major supermarkets.

The deal comes as Unilever continues a shake-up of its business, which will see it move from 1,200 brands to just 400. Niall FitzGerald, Unilever's chairman, said SlimFast was "ripe for international expansion".

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