Ben & Jerry’s is suing its owner, consumer product giant Unilever, in a rare case of trying to prevent Unilever from selling Israeli ice cream brands to local licensees.
Last year, Ben Cohen and Jerry Greenfield, founders of a company renowned for its attitude towards hot button issues, said: They are no longer sold In the occupied territories of Israel. Licensees are expected to continue to sell Ben & Jerry’s in these regions.
The rift between Ben & Jerry’s and Unilever dates back to 2000 when Unilever acquired the ice cream brand, the DealBook newsletter reports. As part of the deal, Unilever has agreed with Ben & Jerry’s independent board of directors to allow Unilever to appoint only two of the 11 seats and continue to oversee the brand and its image.
An unusual arrangement gave the founders continued control despite the sale of their company. Shareholders typically vote for board elections. However, the deal is between Unilever and Conopco, the only official shareholder of Ben & Jerry’s. Conopco is obliged to vote for the founder’s board pick and its successors. These candidates have also been nominated by Ben & Jerry’s Board of Directors.
Unilever can choose the CEO of the brand. This is what the board normally does, but even that person is obliged to follow Ben & Jerry’s independent board when it comes to maintaining the “social responsibility aspect of the company.” A professor of business law at Tulane University Law School, who studied the acquisition, told DealBook.
But Unilever seems to have potential, Lipton said. The contract itself may not be enforceable in court. Traditionally, a contract is made between two parties. In this case, the agreement could have been between Unilever and the founders of Ben & Jerry’s, but she said it wasn’t.
“It’s like signing a contract with yourself,” Lipton told DealBook. “The idea that a company can sign you if you are the only shareholder of the company is unheard of. It’s very strange.”
She said she had never heard of a similar incident, adding that “this is a case study in a business law class.”
