Jack TenneyExtra Point

by Jack Tenney, Publisher

May 2000

Ice cream number game

Why bother with trillions when you can get billions?" I'm paraphrasing Doctor Evil from the movie "The Spy Who Shagged Me."

It's difficult to get your head around some of the huge numbers we are bombarded with daily, isn't it? I've been kind of contentedly drifting along dumbly assuming that as a former financial manager I could explain most of the numbers that come up in mixed company. Luckily, no one has ever pressed me on the difference between the national debt and annual surpluses or deficits. Nor have I had anyone look to me to explain money supply or Fed policies or currency plays of hedge funds.

But a lot of people seem to be drawn like moths to my only wool golf sweater (ex-golf sweater) to the Unilever-SlimFast-Ben & Jerry's stock play. (Stocks! Now there's a place where you can get change for a trillion, eh?) I'm anticipating questions.

I read a press release about the deal that quoted Folkert Jan van der Veer of the Effectenbank Stroeve of Amsterdam (not N.Y. I'm guessing). Analyst Van der Veer is bullish on Unilever, citing its new found "real focus on brand management." Unilever is in the process of dumping slow-growing brands in favor of fast-growing ones. The allure of the pricing commanded by super premium ice creams explains Unilever's interest in our boys Ben and Jerry, while the fact that SlimFast has thrived for decades in the U.S. (with a population that is 55 percent fatties, according to some smug ectomorphs) begs for worldwide expansion.

Cool. That maybe explains the reasoning, the rationale, the whatdoyoucallit -- mission vision for the buy. However, where the heck did the numbers come from?

Unilever paid a total of $2.6 billion to acquire these two companies, the Frick and Frack of snack attack. SlimFast, a little outfit on West Palm Beach, Fla., got the lion's share. Ben & Jerry's Homemade shareholders (Ben, Jerry and a few others) split $326 million. That means the West Palm crowd is hacking up $2.274 billion. Like 326 is a bigger number than two, but a billion is a thousand million, if you get my drift.

How to explain the different company valuations?

Allow me.

First off, let's get the numbers down to human scale. A pint of Ben & Jerry's Best Vanilla in the World will run you about three bucks at a supermarket, while a can of SlimFast at the same store is around a buck. Convert the deal into product and split the product up among us Vermonters ($326,000,000 buys 108,666,667 super premium pints divided by 650,000 Vermonters yields maybe 167 pints a piece. $2,240,000,000 buys 2.24 billion cans of SlimFast or more than 3,498 freaking cans of that stuff for every Vermonter.)

Got the picture? You're sitting in your tent or wherever and you've got what seems like a lifetime supply of Slimfast, but only a few months' worth of ice cream pints. Read the labels. One serving of each (both vanilla) is right around 200 calories. (That's one serving per can vs. four servings per pint, yeah, right!) Big whoopee, SlimFast has only three grams of fat per serving up against 16 grams for the better tasting stuff. The real kicker though is the slogan contrast. SlimFast offers "Lose weight, feel great!" up against Ben & Jerry's "We oppose Recombinant Bovine Growth Hormone."

The price diff make a little more sense now?