UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN
College of Business
DEPARTMENT OF FINANCE
Finance 321 – Advanced Corporate Finance – Spring 2007
Case 1 (20 points)
Ben & Jerry’s Homemade – Darden Business Publishing Case UVA-F-1364
Due February 22, 2007
Information on how to obtain this case will be announced in class and posted on the class website.
For this project you are to work in teams of four, and turn in one analysis for each team. You will
each need to keep a copy of the case and your team’s analysis for class discussion and exams. You
may form your own team, or let me know if you need help in assembling a team. Each team should
have students with some different majors to bring different skill sets and points of view to the team.
Your analysis of this case should include the following:
1) Calculate the key financial ratios of the company based on the material covered in lecture 3.
2) How well has Ben & Jerry’s fulfilled its mission statement? Assign grades (A to F) for their
performance on each of the three objectives in its mission statement and explain your
rationale for each grade.
3) How did Ben & Jerry’s become a takeover target?
4) What evidence is there that investors are dissatisfied with the company’s performance?
5) What other stakeholders have an interest in this potential takeover, and how would their
interests be affected by a takeover?
6) What takeover defenses are available to management in this case?
7) Using the approach covered in lecture 7 by Brian Callaci, calculate a fair value for Ben &
Jerry’s stock. What firms would you use as benchmarks for Ben & Jerry’s? Do you think
the current takeover offers are justifiable?
8) Should Henry Morgan defend the agenda of the current management or support one of the
acquisition offers? Why? Under what circumstances could Henry Morgan face liability for
his decision?
Your report is to consist of an Executive Summary (1-2 pages) that advises Henry Morgan on what
position to take in the upcoming board meeting, followed by a complete report answering the
questions listed above and the necessary analytics to support your recommendation.