Bob Fernandez, author of The Chocolate Trust: Deception, Indenture and Secrets at the $12 Billion Milton Hershey School, expects Mondelēz to make another play for Hershey after Hershey rejected its $23bn takeover earlier last month.
It comes as the AG reached an agreement with the Hershey Trust - which has 80% voting rights for Hershey. The agreement was reached on July 30 in the Orphan’s Court Division of the Dauphin County Court.
The AG had been investigating spending patterns by Hershey Trust board members.
Hershey Trust Company
The $12bn Hershey Trust Company was founded in 1905, and it serves as the trustee for the Milton Hershey School Trust, and owns a controlling interest in the Hershey chocolate company, according to the Trust's website. The Trust currently has nine board members with Velma Redmond as the chairperson, and Joseph Senser as the vice chairman. Other seven members include: James Brown, Robert Cavanaugh, Robert Heist, M. Diane Koken, James Mead, James Nevels, David Saltzman.
"All of our efforts that led to this agreement were made to ensure that the vision of Milton and Catherine Hershey remains intact," attorney general, Kathleen Kane, said in a statement. "They had the foresight to establish a Deed of Trust to provide a superb education for generations of disadvantaged children. The reforms in this agreement will help ensure that continues."
Majority of board members to step down
The Trust has faced criticism in recent years for extravagant spending.
Ex-board chairman Robert Cavanaugh is one of the three board members that will leave the Trust. The other two, according to a statement made by AG, are Joseph Senser and James Nevels. In addition, James Mead and Velma Redmond (the current Trust chairman) will leave no later than Dec 31, 2017.
Facing an exodus of directors over the next 17 months, the Trust board now will have to find new directors to replace those departures, according to Fernandez.
The court agreement also shows that prior to the election of any new manager/director, the Hershey School and the Hershey Trust company must now give the Office of Attorney General 30 days written notice, “including a resume of the candidate's education, experience and relationship, if any, to incumbent managers/directors.”
The agreement also stipulates that the Trust board should have 13 members. This will require the appointment of nine new board members over time, Fernandez said.
What does the chairman say?
Upon the agreement with the Office of AG, Redmond also penned an open letter, saying that the board was “satisfied with the outcome”.
He added that the joint boards with AG now move forward, working collaboratively, as “we direct, support and fulfill the ongoing mission of the Milton Hershey School”.
Redmond pointed out that the Hershey School is performing at exceedingly high levels, and will continue to grow its enrollment towards 2,300 students with construction already under way on its North Campus expansion site.
Is Mondelēz taking advantage of board changes?
“This year's turmoil in Hershey may have provided an opening for Mondelēz to begin discussions on acquiring the chocolate company,” Fernandez said.
“Another view is that the bitter feelings among board members could paralyze decision-making and make it difficult to do anything over the next several months," he continued.
“Mondelēz has not said it lost interest in Hershey and many believe it could make another pass at it now that the attorney general has concluded its investigation with Friday's agreement,” he added.