Fundamentals of Corporate Finance Notes on Ben and Jerry\'s Case Study PDF

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notes on a case study about Ben and Jerry's financial standing in the stock market. Professor Susan Elkinawy....

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Fundamentals of Corporate Finance Notes 9/20/21 Professor Susan Elkinawy Ben and Jerry’s Case Study ● Leadership position in a variety of social causes ● Chief executive Perry Odak thought in the shareholders’ best interest, selling to the highest bidder ● Emphasis on socially progressive causes and strong commitment to the community ● Did not do a traditional public offering, instead offered 75,000 shares at $10.50 a share to Vermont residents, hoping to support those who had helped in making Ben and Jerry’s initially successful ● A traditional broad offering was then offered on NASDAQ ● Every decision the corporation made, be it financial, operational, or marketing, was tied to community awareness and community welfare. ● Fed milky water to pigs to conserve water waste ● Mission statement is focused on profitability and social awareness ● Created a new flavor Chocolate Fudge Brownie to use the 50-pound blocks of brownie that their baking distributor had messed up on rather than asking them to redo it because the bakery needed the money for payroll ● Goal of a non profit-oriented policy placed strict restrictions on corporate control ● Helped them carry out their threefold corporate mission ● Dreyer’s also involved in community service activities ● Meadowbrook Lane Capital was a private investing fund that depicted itself as socially responsible ● Morgan doubted Ben and Jerry’s social mission would survive a company takeover by a large, traditional company ● Despite concern, he stated that he represents the shareholders’ best interests and a takeover would be aligned with that ● Would make sense for Ben and Jerry’s to sell because they have remained around the same stock price of $21 despite regular sales and increasing earnings ● Returns should be better considering what Ben and Jerry’s has to offer as a company ● Some reasons for underperformance, like price of milk and cream, are not in company’s control ● Ben and Jerry’s average return on shareholders’ equity stood at 7% last year which increased 5% from 1997, and is at 9% this year...