Ben & Jerry's sues parent company Unilever over sale of Israeli business

The ice cream maker said the deal violated its 2000 acquisition agreement with the UK food giant

A Ben & Jerry's ice-cream delivery truck at their factory in Be'er Tuvia industrial area in Israel last year. Reuters

Ice cream maker Ben & Jerry’s is suing its parent company Unilever in an attempt to halt the sale of its Israeli business to a local franchisee, an agreement that would allow the ice cream to be sold in the Israeli-occupied West Bank.

In a lawsuit filed in a federal court in New York, Ben & Jerry’s said the deal violated its 2000 acquisition agreement with the UK-based food giant Unilever and is against its business ethics.

The Vermont company said Unilever took the decision to sell its Ben & Jerry’s business interests in Israel to Israeli businessman Avi Zinger, the owner of American Quality Products, without the approval of its independent board.

When founders Ben Cohen and Jerry Greenfield sold their ice cream company to Unilever, the brand retained an independent board of directors tasked with preserving the co-founders’ social values.

“Ben & Jerry’s brand is synonymous with social activism. The dispute concerns the autonomy of Ben & Jerry’s independent board of directors and the core values the company has spent the last 44 years establishing,” the company said.

On June 29, Unilever announced it was selling its Ben & Jerry’s business interests in Israel to a local licensee. The new arrangement means Ben & Jerry’s will be sold under its Hebrew and Arabic names throughout Israel and the West Bank under the full ownership of its current licensee.

Mr Cohen and Mr Greenfield sold the company to Unilever in 2000 for $326 million.

Under the terms of Unilever’s acquisition agreement, Ben & Jerry’s and its independent board were granted rights to take decisions about its social mission, but Unilever said it reserved primary responsibility for financial and operational decisions and, therefore, has the right to enter this arrangement.

“Unilever abruptly reversed course, announcing that Ben & Jerry’s will be sold in the West Bank through a third-party distributor. Unilever’s unilateral decision was made without the consent of Ben & Jerry’s independent board of directors, the entity contractually empowered with protecting Ben & Jerry’s brand,” Ben & Jerry's said in the lawsuit.

“An injunction restraining Unilever from violating the express terms of the merger agreement and shareholders agreement is essential to preserve the status quo and protect the brand and social integrity Ben & Jerry’s has spent decades building.”

Last month, Unilever said the new business arrangement followed the company’s thorough review of Ben & Jerry’s in Israel.

“Unilever has used the opportunity of the past year to listen to perspectives on this complex and sensitive matter and believes this is the best outcome for Ben & Jerry’s in Israel,” it said.

Unilever, which employs about 2,000 people in Israel, has four local manufacturing plants and works with a network of 2,000 local suppliers and service providers in the country.

Last year, Israel’s ambassador to the US accused the founders of Ben & Jerry’s of “helping the anti-Semites” after they defended the company’s decision to not sell its ice cream in the occupied Palestinian territory.

Israeli President Isaac Herzog went so far as to call the Ben & Jerry’s decision “a new form of terrorism” and an effort to “undermine the very existence of the state of Israel”.

Mr Cohen and Mr Greenfield called these allegations “absurd” and “painful” during an interview with HBO in October.

Ben & Jerry’s decision also led US funds — managed by the states of New York, Illinois, New Jersey, Florida and Texas — divesting their stakes in Unilever.