Ben & Jerry's founders explore deal to separate ice cream brand from Magnum: What is the plan and why?
Ben Cohen and Jerry Greenfield, co-founders of ice cream brand Ben & Jerry's, are exploring a deal to separate the business from its current owner, The Magnum Ice Cream Company, the Wall Street Journal (WSJ) reported on Monday, citing the founders and Pete Stavros, founder of Expanding ESOPs.
The proposed deal would carve out Ben & Jerry's and place it under an employee stock-ownership plan (ESOP), giving employees a stake in the business. However, any transaction would require approval from Magnum, which has said the brand is not for sale.
According to the WSJ report, Cohen and Greenfield have been discussing a potential separation with Stavros, whose organisation, Expanding ESOPs, focuses on employee ownership.
Under the proposed structure, rank-and-file employees would receive shares in the business. The arrangement could also provide tax benefits to the company, the report said.
An employee stock-ownership plan allows workers to own a stake in the company they work for. In this case, the proposed arrangement would place employee ownership at the centre of a potential carve-out of Ben & Jerry's from Magnum.
However, the discussions do not mean a deal has been finalised. Magnum's approval would be necessary for the separation to proceed.
In an emailed statement to Reuters, Magnum said: "Ben & Jerry's is not for sale and, more importantly, is thriving as part of The Magnum Ice Cream Company."
The company also argued that separating the brand would create significant "dis-synergies", reduce investment in its social mission and push up selling prices per unit.
The proposed deal comes against the backdrop of repeated disagreements between Ben & Jerry's founders and its corporate owners over the brand's social and political positions.
Ben & Jerry's has a long history of social activism. Its founders and independent board have repeatedly clashed with former parent Unilever over political and ethical stances, according to Reuters.
The brand is now owned by Magnum, which was spun off from Unilever. Tensions have continued under the new ownership, with Magnum also seeking to weaken the control exercised by Ben & Jerry's independent board.
The board currently has five members, Reuters reported.
The potential separation could give the brand a different ownership structure while putting employees in a position to hold shares in the business. However, the information available so far does not establish that the proposed employee-ownership arrangement is the sole reason behind the founders' discussions.
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