'Sweetest' town clings to Hershey, adding to takeover hurdles
By Koh Gui Qing
HERSHEY, Pennsylvania (Reuters) - The town of Hershey, Pennsylvania, calls itself the "sweetest place on earth."
But if chocolate giant Hershey Co. (HSY.N: Quote) considers any new acquisition offer in the coming weeks, it could face bitter opposition from some in its namesake town, where residents have prospered from its presence and tend to be fierce defenders of its independence.
The impact of such views goes beyond sentimental in the wake of Mondelez International Inc's (MDLZ.O: Quote) $23 billion bid to buy the company, which Hershey said on June 30 it had rejected. The town of Hershey, where the company's staunchest loyalists are referred to as "Hershey-ites", has real influence over corporate decisions.
The Hershey Trust, a $12 billion school charity and the company's controlling shareholder, has become increasingly involved in the local community over the decades, and has appeared to listen to its concerns in the past.
Pennsylvania's attorney general, who supervises the trust and can ask a court to block any deal, holds an elected office and is sensitive to local concerns, though the current office holder is not planning to seek reelection.
Pennsylvania law requires any charitable trust to consider, when selling an asset, the “special relationship of the asset and its economic impact as a principal business enterprise on the community” and the “special value” of its ties to the community.
Since the company was founded by Milton Hershey 122 years ago, residents here have fought many plans that would have changed Hershey Co. and, in turn, a community built around one of the world's most famous confectioners.
Although the Hershey Trust rejected the bid by the maker of Oreos cookies, a spike in Hershey's share price above the bid of $107 per share has indicated investors expect a new offer. Continued...