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Unilever 'may be unable to offload ice cream', lawyers warn

Ben & Jerry's ice cream on shelf
Ben & Jerry's ice cream on shelf

Unilever faces an uphill battle to sell Ben & Jerry's, with lawyers warning that the ice-cream brand's Left-wing political activism could pose problems for any prospective buyer.

The consumer goods giant unveiled ambitions last week to offload parts of its business, including lower-growth food brands, in an effort to supercharge a push into health and hygiene.

However, lawyers this weekend warned Unilever may struggle to include Ben & Jerry's in any disposal, due to stipulations in the initial takeover contract for the ice cream company.

Under the deal from 2000, Unilever agreed to allow Ben & Jerry's an independent board, with majority representation for the directors of the ice cream brand, ultimately handing control of decision-making to a group known for taking strong political stands.

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Last summer Ben & Jerry's sparked a row with Israel by saying it would stop selling ice cream in occupied Palestinian territories, as it was "inconsistent with our values for our product to be present within an internationally recognised illegal occupation".

Lawyers claim the stance by the ice cream brand puts Unilever at risk of sanctions and penalties over potential breaches of US and Israeli law, including anti-boycott laws in the US and discrimination legislation in Israel.

Jesse Fried, Dane Professor of Law at Harvard Law School, said any new buyer for Ben & Jerry's would "step into the shoes of Unilever and inherit the current board arrangement, as the merger agreement binds Unilever as well as any successors".

He said a new owner could decide to litigate against the issue - and in his view, they would win the right to override Ben & Jerry's board decisions.

However, the prospect of legal wrangling with the Ben & Jerry's team risks killing any attempt to offload the business.

Analyst Bruno Monteyne said the independent board was a "material consideration".

He said: "It would impact the valuation that any bidder would likely want to bid for that part of food."

Jonathan Turner, CEO of UK Lawyers for Israel, said: "This would significantly restrict Unilever's options for disposal of Ben & Jerry's, and potentially other ice-cream brands if aspects of the business are integrated, since any purchaser would risk being subjected to sanctions and penalties."

Unilever declined to comment.