Ben & Jerry's Rallies on News of Bid - TheStreet

Ben & Jerry's Rallies on News of Bid

The stock jumps after the Vermont company gets an expression of interest.
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Ben & Jerry's Homemade

(BJICA)

, the sometimes whimsical, often quirky ice cream manufacturer, said Thursday it's received a bid from an unnamed potential acquirer.

Shares of the company, based in South Burlington, Vt., leapt on the news. Around midday the stock was up 5 3/4, or 28%, to 26 1/8. (The stock closed up 4 5/16, or 21%, to 24 11/16.)

Ben & Jerry's said the bid is "significantly above" the stock's closing price Wednesday of 21, and is now being considered by the board of directors. "No implications should be drawn as to what definitive decision will be reached by the board after it has concluded its deliberations or as to the timing of the decision," the company said in a statement. No further details were available.

The company Thursday disclosed the "indication of interest" after the stock rose 2 15/16, or 16%, on Wednesday. That was a significant move, especially in light of how the stock has languished recently, falling more than 25% in the last six months alone.

"This will be a very interesting battle," said analyst Jeffrey Kanter of

Prudential Securities

. "It's almost like capitalism vs. tie dye." That is a reference to the liberal philosophical bent and socially responsible attitude of founders Ben Cohen and Jerry Greenfield. The company contributes 7 1/2% of its profit before tax to charities, including donations to the

Ben & Jerry's Foundation

.

He continued, "The highest bidder will not necessarily win. Ben and Jerry have spent their lives building a company with a unique corporate culture. I think they would want to see that somewhat preserved." Kanter rates Ben & Jerry's a hold and his firm has done no underwriting for the company.

In the statement, the company emphasized its policy of remaining "an independent Vermont-based company." However, after issuing a press release and watching its stock price zoom higher, the company has "now put itself into a position where they put themselves in play," said Kanter. "And it will be tough to say no, because the stock price will go back to the teens and if I'm a long-term institutional shareholder, I am livid. This is a stock that's missed the entire bull market of the '90s. I'm buying it for returns, not for the Peace Pops."

Kanter surmised that a possible acquirer could be either

Ice Cream Partners USA

, a joint venture of

Nestle SA

and

Pillsbury

, a subsidiary of

Diageo

(DEO) - Get Report

, or

Dreyer's Grand Ice Cream

(DRYR)

, because both have the capability needed to distribute Ben & Jerry's products. "Those are the obvious choices, but Ben and Jerry don't always go with the obvious choices," he said.

Nestle, Dreyer's and Pillsbury said they do not comment on rumors.