Unilever ice cream saga may sour ESG deals

Ben & Jerry's shop in London
An ice cream of Ben & Jerry’s is seen at their shop in London, Britain, October 5, 2020. REUTERS/Hannah McKay

LONDON, Dec 16 (Reuters Breakingviews) - Unilever’s (ULVR.L) drawn-out ice cream drama offers food for thought on buying companies with strong political leanings. The consumer goods group said on Thursday that its litigation with the independent board of Ben & Jerry’s over the sale of its Israeli ice cream business has “been resolved”. The ending removes a potential headache for the new Unilever chief executive who will take over when current boss Alan Jope steps down next year.

The ice cream mess made for an odd corporate drama. Unilever bought the hipster brand in 2000 for $326 million, leaving Ben & Jerry’s board more independence than a typical subsidiary. When Ben & Jerry’s halted sales in the occupied West Bank because it said it was inconsistent with its values, it risked alienating Unilever customers. Jope then sold the Israeli business to its local licensee, Avi Zinger, for an undisclosed sum.

Far from solving the issue, the move sparked a legal battle with Ben & Jerry’s, which sought damages and demanded its trademarks be returned. The company also asked a judge to stop Zinger from selling the ice cream in the West Bank. With no details on the settlement, it’s difficult to say which side gave up more to resolve the situation. But the saga, which angered shareholders and alienated customers, may make Unilever – and maybe others – think twice before buying up companies holding strong views on geopolitics. At the very least, they may demand stricter controlling rights when negotiating the deals. (By Aimee Donnellan)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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