Reeling from harsh criticism by major investors over his failed effort to purchase the healthcare division of GlaxoSmithKline, Unilever CEO Alan Jope now must sweat the likelihood that he won’t be able to unload anti-Semitic subsidiary Ben & Jerry’s, even if he wants to.
The British conglomerate has underperformed compared to many of its competitors in recent years, and Jope’s GSK acquisition plan was perceived as a desperate move to shore up the bottom line. He also said, during his overtures to GSK, that Unilever would likely sell off less profitable food product lines, which would include Ben & Jerry’s.
However, according to legal experts, the progressive political activism of the ice cream maker’s independent board of directors may make it radioactive to any potential suitors.
City A.M. reports:
Lawyers told the Sunday Telegraph that Unilever may struggle to offload Ben & Jerry’s due to details in the takeover contract in 2000 which handed control of decision-making to the firm, known for its strong political stands.
Ben & Jerry’s made headlines last year when it said it would stop selling ice cream in occupied Palestinian territories occupied by Israel, which it said was “inconsistent with our values for our product to be present within an internationally recognized illegal occupation.”
Jesse Fried, Dane Professor of Law at Harvard Law School, told The Sunday Telegraph that the new owner would “step into the shoes of Unilever and inherit the current board arrangement, as the merger agreement binds Unilever as well as any successors.”
Fried warned that a new owner could decide to litigate against the issue but the prospect of a legal battle with the Ben & Jerry’s board would risk sabotaging any potential purchase.
Compounding the situation is the expectation that Israel’s business regulatory agency, the Israel Competition Authority, will finally weigh in on Ben & Jerry’s discriminatory business practices.
“Antitrust Commissioner Dror Strum informed the Competition Authority that the move was illegal under the 2001 merger approval decision between Ben & Jerry’s and its parent company Unilever Global, as the contract prohibited any action that ‘may interfere with the franchisee’s activities in Israel,’” Israel Hayom reported over the weekend. “Ben & Jerry’s Israel franchisee Avi Zinger has reached out to the Competition Authority several times in recent months to intervene in the matter and demand answers from Unilever, but to no avail.”
Zinger said in December that Unilever and Ben & Jerry’s underestimated the backlash against their anti-Semitic move.
Jewish News Service reported last week that Unilever’s stock has plummeted 20.7 percent since Ben & Jerry’s announced its boycott last summer, amounting to a $26 billion loss.