Ben & Jerry’s in legal tussle with Unilever over sale of Ice cream business in Israel

US – Ben & Jerry’s, an American company that manufactures ice cream, frozen yogurt, and sorbet, has sued its parent company Unilever over its decision to sell the ice cream brand’s business in Israel to a local licensee.

Ben & Jerry’s which has filed the case in the US District Court in Manhattan, alleges the deal with American Quality Products Ltd (AQP) violates the two parties’ original merger and shareholder agreement.

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Ben & Jerry’s wants the court to stop Unilever from violating the terms of its merger and shareholders agreement, “to preserve the status quo and protect the brand and social integrity Ben & Jerry’s has spent decades building.”

Ben & Jerry’s said Unilever’s decision “was made without the consent of Ben & Jerry’s Independent Board of Directors, the entity contractually empowered with protecting Ben & Jerry’s brand.”

The Cookie Dough ice-cream maker noted this arrangement was agreed upon when Unilever acquired Ben & Jerry’s in 2000 from its founders, Ben Cohen and Jerry Greenfield.

However, the FMCG group said that the takeover terms gave it the primary responsibility for financial and operational decisions and therefore has the right to enter such an arrangement.

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What is the prerogative of Ben & Jerry’s and its independent board, according to Unilever, is the rights to make decisions about the ice cream maker’s social mission.

In a statement to The Wall Street Journal, a Unilever spokesperson said the company had the right to enter the arrangement and noted that “the deal has already closed.”

The lawsuit is an aftermath of Unilever’s decision to sell its Ben & Jerry’s business interests in Israel to Avi Zinger, the owner of American Quality Products Ltd (AQP), the current Israel-based licensee that had manufactured and distributed the ice cream brand in Israel and the West Bank.

Through the arrangement, Ben & Jerry’s would be sold under its Hebrew and Arabic names under full ownership of AQP.

During the sale, Unilever revealed it was based on Ben & Jerry’s July 2021 announcement that it would no longer allow its ice cream to be sold in the West Bank because it was “inconsistent with our values for our product to be present within an internationally recognized illegal occupation.”

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Ben & Jerry’s said it would not renew its license agreement with AQP when it was set to expire at the end of 2022, but would “remain in Israel through a different business arrangement.”

Ben & Jerry’s board chair told NBC News that it had wanted to release a different statement that did not mention continued sales in Israel.

In 2021, Ben & Jerry’s released a statement on its website and Twitter saying that it would end sales in “Occupied Palestinian Territory (OPT)” while continuing operations in Israel through “a different arrangement.”

The statement triggered a backlash from the prime minister of Israel, as well as several US state attorney generals who challenged Unilever’s support of the ice cream brand.

In addition, more than half a dozen states including Texas, New York, and Florida divested their pension fund investments in Unilever.

Ben & Jerry’s announcement also triggered a lawsuit by AQP in March over its decision to sever their relationship.

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