“Half a year after announcing to Avi Singer, the owner of Ben & Jerry’s Israel, the termination of his contract due to his refusal to stop selling ice cream in Judea and Samaria, the global Unilever company records a 20.7% drop in its share value – a cumulative loss of about $ 26 billion “. This report was uploaded by journalist Yaron Avraham on the N12 website. Minister Ayelet Shaked shared a screenshot of him, adding the obvious conclusion: “It is not worth boycotting Israel.”
The report on the subject on the N12, and in other media, is based on a publicity announcement issued by Ben & Jerrys Israel. The description of the incident is even more dramatic, and is defined as an “unprecedented crash … “Abroad, they are currently waging a large-scale struggle against Unilever Global.” Indeed, according to media reports, since the “boycott announcement” several states in the US, including Florida, Texas, New York, New Jersey and others, have announced their intention to order state pension funds to withdraw their investments in company shares, in accordance with laws prohibiting a boycott of Israel , Which have been enacted in the United States in recent years.
But is it really possible to attribute the decline in the last six months in Unilever stock to the decision made by one of its subsidiaries?
It was opened and stated that determining the reasons for the decline or rise of a stock is not a scientific matter. A stock move weighs the estimates and expectations of all investors at any given moment, and it is not always possible to point to a specific factor responsible for this. At the same time, when it comes to the stock of a giant company such as Unilever (traded in London at a value of £ 94 billion), which is covered by many analysts, and whose main operations receive extensive media coverage, this makes it possible to make reasonable assumptions. In the last six months?
On the day after the ice cream company’s “boycott announcement” (19.7), its parent company, Unilever, did not receive a special response (a decrease of less than one percent). Exactly a few days later, when the company published its second quarter reports, it lost about 6%. Are these related to Ben & Jerry’s Israel? probably not. After all, the “Israeli story” was already familiar to investors, and in the reports of the world economic press from those days, and also in the analyzes of analysts, it is not mentioned at all.
The most dramatic event in the stock in the last six months has taken place in recent days, and it may not be coincidental that this is also the timing of the publicity announcement (which officially marks half a year since the “boycott announcement”). This is a $ 68 billion deal (in cash and shares) and investors do not seem to have liked this move. As a result, in the days leading up to January 19, Unilever shares lost 10.7%. And Jerrys Israel, who were even honest enough to mention it themselves in a press release, by the way, in recent days, after Unilever announced it was dropping the deal, its stock has actually risen 4.5%, so that since July 19 it has lost “only “15.4%.
But the truth is that there is no dispute in the capital market that Unilever has recently been showing a lackluster return compared to its competitors, and in relation to the central stock exchange of the London Stock Exchange, FTSE 100, to which it belongs. A statement from Ben & Jerrys Israel mentions that over the past six months, its “big competitor”, Nestlé, has added 5% to its value. The choice of Nestle is not explained, and it is possible to choose other companies that actually showed a decline during the same period, but, as mentioned, there is no dispute that the company’s share is not in a good period. In fact, as part of investors’ ongoing criticism of Unilever, we were able to find even a critique that dealt with the “boycott” issue.
Terry Smith, owner of the Private Equity Fundsmith Fund, one of the largest holders of Unilever, recently criticized the company, which received media coverage mainly for mocking the fact that Unilever felt the need to “define the purpose of Helman’s Mayonnaise” (“Mayonnaise has been around since 1913”). So it can be assumed that in the meantime consumers have already understood what it is used for, “he wrote.” Spoiler warning – for salads and sandwiches “). But as a prelude to this critique, which dealt with the company engaging in “social manifestos” instead of its business foundations, “the most obvious example of this” was mentioned, which is, according to Smith, “Ben & Jerry’s refusal to sell ice cream in the West Bank.” By the way, the bottom line is that Smith still explains why he still believes in the company, so even here, when it comes to an important investor who bothers to mention the Ben & Jerrys issue, no evidence of significant business damage to Unilever stock can be found due to the way one of its subsidiaries operates. Small in the Middle East.
In general, it is worth returning for a moment to the announcement of Ben & Jerrys Israel and putting some things in proportion. The decline in the company’s share by about 20% in six months is not an “unprecedented crash” as it is written. Even if we put aside the problematic timing of the return test (a moment after the saga with GSK), it can be seen that even in previous periods the stock has fallen at similar rates, and that it has long suffered from negative sentiment in the markets. Thus, between October 2020 and February 2021, the stock lost over 20% of its value. A similar fall was also recorded between September 2019 and March 2020, although this is a period that also includes the falls recorded in all world markets due to the eruption of the corona.
The PR announcement also states that the 20% drop in the share means a “huge loss of $ 26 billion” for the company, a claim that was also reflected in Avraham’s report. But this is not a loss – Unilever is a profitable company – The company, following the declines in the stock.
Bottom line: Shaked’s tweet is misleading. In the six months to January 19, the Unilever stock did lose about 20%, but it is difficult to determine how much, if any, of this decline is related to the decision of its subsidiary, Ben & Jerry’s, to stop selling ice cream beyond the Green Line. The sharp decline in the stock in the days before the publication of the PR announcement is attributed – both in media reports and according to Ben & Jerrys Israel spokesmen themselves – to a huge deal that it intended to carry out.
Research: Uri Cohen
For the full test click here
There: Ayelet Shaked
party: right
date: 19.1
a quote: “Half a year after announcing to Avi Singer, the owner of Ben & Jerry’s Israel, the termination of his contract due to his refusal to stop selling ice cream in Judea and Samaria, the global Unilever company records an unprecedented crash of 20.7% in its share value – a cumulative loss of 26 Billion dollars”
Grade: misleading
Interior Minister Ayelet Shaked Shared on 19.1 News reporter 12 Yaron Avraham reports that “six months after announcing to Avi Singer, the owner of Ben & Jerrys Israel, the termination of his contract with him due to his refusal to stop selling ice cream in Judea and Samaria, the global Unilever company records a 20.7% drop in its share value. “A cumulative loss of about $ 26 billion.” Shaked added her own caption to the tweet: “It is not worth boycotting Israel.”
We examined whether, as stated in the news and as Shaked hinted, the decrease in the value of Unilever’s share was due to the decision of Ben & Jerrys.
The source of Avraham’s report is a PR statement with the same wording, which Ben & Jerrys Israel distributed to journalists on January 19. “These days, the executives are fighting a large-scale battle against Unilever Global.” First of all, the person who informed Singer of the termination of his contract was not Unilever itself – a huge multinational corporation – but the global Ben & Jerrys company, which has belonged to Unilever since its acquisition in 2000. Immediately after the affair broke out, Unilever issued a statement emphasizing the difference between The two entities insisted that “it remains committed to a presence in Israel.”
The period of time chosen to examine Unilever’s share behavior is, as stated, half a year – from 7/19/21, the day on which the global Ben & Jerrys company announced the termination of the contract with its Israeli franchise, until 7/19/2022. Indeed, during these six months, the value of Unilever’s stock fell slightly more than 19%. However, a closer examination reveals that the connection between the stock’s behavior and the Israeli angle is extremely tenuous.
First, as Ben & Jerrys Israel itself writes at the bottom of the PR announcement it circulated, last week’s drop in Unilever’s shares was due in part to a purchase that the food and beverage giant, which fell at the last minute, made. On 14.1, and became official on 19.1. During this time the stock fell by 10.7%, after a period of several months of consistent rise. At 4.5%.
Choosing a time window of half a year to examine the stock can also be misleading. During this period, as stated, the value of the share did decrease by 19% (15%, as of 23.1). But in the days following the announcement by Ben Cohen and Jerry Greenfield of their intention to stop selling ice cream in the territories, Unilever shares were barely hit – and recorded a decrease of less than one percent. However, on July 22, three days later, the company released its quarterly report for the second quarter of 2021. The company’s performance and forecasts for the rest of the year probably did not pose confidence among investors, and the stock lost about 6% of its value – more than six times as a result. The Israeli “storm”. In the reports of the economic press from those days and in the analyzes of capital market experts, the Israeli story is not mentioned at all as one of the reasons for the disappointing performance of the stock.
A similar decline occurred about six months earlier, when Unilever reported last quarter’s 2020 performance and published its full-year financial statements. The value of the stock then, between 2-5.2.2021, fell by more than 8% – more than half a year before the development in the Israeli arena. In fact, the difficulties of the food and cosmetics conglomerate began more than a year earlier, and it seems that like most disappointing performances during this period, they can be attributed more to the Corona damage than to the “struggle of Jewish communities abroad.” -8.8.2019, and since then to this day has lost about 30% of the battle. During this period, several declines of more than 20% were recorded, so that Ben & Jerrys Israel’s determination as if it were an “unprecedented crash” is incorrect.
A statement issued by Ben & Jerry’s also stated that “for comparison, the stock of major competitor Nestle has risen 5% in the last six months.” Here it seems that the Israeli franchise of the ice cream maker is a little more precise. In the period between 19.7 and 19.1, Nestle shares rose 4.7%. But Unilever has a number of other competitors, and it is not clear from what it was determined that Nestle is “the big competitor”. Shares of Johnson & Johnson, for comparison, fell 1.2% over the same period, shares of Henkel, the German consumer goods and toiletries giant, fell 10%, Lauder shares fell 6%, and Danone shares 2%. However, the share of Procter & Gamble in the last six months has jumped by almost 16%, the share of Kellogg by 2.8% and PepsiCo has registered an increase of about 12% in the share value. Unilever’s direct competitors have indeed recorded impressive gains or far more moderate declines than Ben & Jerry’s’s parent company.
In addition, it is difficult to ignore the scope of activity taken against the giant corporation by many U.S. officials. Since the announcement of the cessation of operations in Judea and Samaria, many U.S. states, including Florida, Texas, New York, New Jersey and others, have announced their intention to withdraw Investments amounting to hundreds of millions of dollars from the company. In accordance with the laws banning boycott of Israel, which were enacted in the United States in recent years as part of the fight against the BDS movement, these heads of state froze pension fund investments and even banned state entities from contacting Unilever. The company, and recently published Fundsmith, a London-based investment fund and one of the largest investors in Unilever, issued an annual report to its clients in which it sharply criticized the company’s conduct and stated that political preoccupation with the Israeli context had hurt its performance.
Finally, it should be noted that contrary to the implied announcement and Avraham’s report shared by Shaked, the drop in Unilever’s stock does not mean a “cumulative loss of about $ 26 billion” for the company itself, but only a decrease in its market value, and a loss for shareholders.
In conclusion, In the six months since Ben & Jerry’s Global announced its intention to stop selling ice cream in Judea and Samaria, its parent company, Unilever, has indeed fallen by about 20%. However, a broader look shows that this is a continuation of a trend that began much earlier, and that the recent sharp decline is the result of a failed business move. Ben & Jerrys’ announcement has ignited a widespread U.S. struggle in which a number of countries have announced a freeze and withdrawal of investment in the company, amounting to hundreds of millions of dollars. Therefore, the determination of Shaked and Ben & Jerrys Israel is misleading.