The furore surrounding the proposed sale by the Hershey Trust of its controlling stake in the Hershey Foods confectionery group is unlikely to be seen again in the future following the Trust's agreement not to sell its shares without first obtaining court approval.
The Trust originally asked Hershey Foods to seek a potential buyer for its shares earlier this year on the grounds that it needed to diversify its interests - 58 per cent of its assets are in Hershey stock- but the possibility of a foreign owner - both Nestle and Cadbury were mentioned - and the likelihood of job cuts and plant closures had the local community up in arms.
Pennsylvania's Attorney General, Mike Fisher, won an injunction which effectively prevented the Trust from selling its stake until a thorough investigation of the likely fall out from the sale had been completed, but faced with an ever-growing opposition, the Trust finally decided to withdraw its shares from sale, despite an apparent bid from compatriot confectioner Wrigley which would have guaranteed jobs.
Now the trust has agreed, in writing, that any future attempt to sell the 77 per cent stake in Hershey Foods will only be made after first gaining approval from the courts, a move which effectively blocks the sale of the company. The Trust's board agreed to the restrictions in a letter sent earlier this week to Fisher's office.
"The board, by its decision, has demonstrated that it has no intention to sell the school trust's controlling interest in Hershey Foods," the letter reads. "To further eliminate any uncertainty in this regard, the board commits to your office that the board will not agree to any sale of the school trust's controlling interest in Hershey Foods without the approval of the Dauphin County Orphans Court, following advance notice to the Office of Attorney General." Fisher had asked the court to force the board to seek approval for the sale.
Sceptics have suggested that the letter is a bid by the board to avoid having to face legal proceedings for their actions in attempting to sell the shares. The Attorney General has regulatory authority over charitable trusts, and there have been repeated calls for Fisher to sack the board for failing to act in the best interests of the Trust.
The need to diversify its investments still remains a priority for the Hershey Trust, and it is now expected to look at alternative options, although the Trust has given no indication as to what these might be.