Beatrice: A Study in the Creation and Destruction of Value



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    • Harvard Business School. I would like to thank Alfred Chandler, David Collis, Robert Eccles, William Fruhan, Ray Goldberg, ASG, Michael Jensen, William McGuire, Cynthia Montgomery, Richard Ruback, Steven Tolliday, and Karen Wruck for help and support on this project. I would also like to thank John Collins, Neil Gazel, Walter Lovejoy, and William Karnes for being generous with their time and insights about the company for which they worked for many years. I owe great debts to Paige Manning and especially Toby Stuart, who did much of the early research for this project. This research is supported by the Division of Research, Harvard Business School.


This paper chronicles the history of the Beatrice company from its founding in 1891 as a small creamery, through its growth by acquisition into a diversified consumer and industrial products firm, and its subsequent leveraged buyout and sell-off. The paper analyzes the value consequences the firm's acquisition and divestiture policies, its organizational strategy, and its governance. The analysis sheds light on a number of issues in organization theory, strategy, and corporate finance, including the sources of value in diversifying aquisitions, the cost of over-centralization and weak corporate governance, and the mechanisms of value creation in the market for corporate control.