'Sweetest little town' blocks sale of Hershey
Friday 06 September 2002
An American confectionery institution is safe, for the time being at least, after an obscure court for orphans in Pennsylvania blocked the sale of the venerable Hershey chocolate company to any buyer, US or foreign alike.
The controversy over Hershey, maker of the omnipresent Hershey bar, erupted last month when the family trust said it wanted to sell its controlling interest in the 108-year old business, cornerstone of one of the most remarkable company towns in the world.
Half of the 12,000 inhabitants of Hershey in central Pennsylvania – the self-styled "sweetest little town in the world" – work for it. The town's main streets bear names like Chocolate and Cocoa, and its street lamps are shaped like Hershey's Hearts sweets. Almost all its amenities, including housing, electricity and sewage works, were provided by the company's legendary founder, Milton Hershey.
Hershey is the country's largest chocolate manufacturer, with sales last year of $4.6bn (£3bn). Small wonder that the local loyalty to the business sparked the outrage of Hershey's citizens when the trust let it be known it had put its 31 per cent stake in the company up for sale, with Nestlé of Switzerland and Cadbury Schweppes among the leading suitors.
Opponents of a sale simply do not accept the trust's argument that it needed to diversify its portfolio, more than half of which is currently represented by stock in Hershey Foods – and the strange structure of the trust gave them their legal opening.
Milton Hershey, who loved children but could have none of his own, established a school for orphans, which became the sole beneficiary of his trust when he died in 1945 at the age of 88. As a result, the local orphans court has jurisdiction over the trust, enabling Judge Warren Morgan to issue his order on Wednesday blocking the sale of the company.
The Hershey trust's assets total a massive $6bn (£4bn), meaning that the humble Milton Hershey School for Underprivileged Youths is backed by resources exceeded among US academic institutions only by the likes of the university juggernauts of Harvard, Princeton, Yale and Stanford.
Even so, the reprieve may be shortlived. Judge Warren's temporary restraining order will be challenged by the trust in a state court, and if that fails Wall Street analysts say it would be overturned as a violation of normal business practice.
If Hershey is to remain independent, the best hope for the town's anxious citizenry may lie in American anti-trust law. Nestlé, which initially was the most likely buyer, has said it expects a deal to be blocked by the federal authorities, at least unless the Swiss company sells other interests in America first.
But Nestlé is now believed to be in talks with Cadbury Schweppes whereby the two foreign firms might carve up Hershey's American facilities.
If that fails, Kraft Foods, a division of the cigarette maker Philip Morris, or Pepsico have been tipped as possible buyers for all or part of Hershey.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
£20000 - £30000 per annum + OTE £50k: SThree: SThree are a global FTSE 250 bus...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...