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Hershey Media Report 7/14/16
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Mondelez rides a Hershey rollercoaster
Jul 14, 2016 | Financial Times
By Lindsay Whipp
Screams from thrill seekers riding Hershey’s rollercoasters drift across the Pennsylvania town that Milton Hershey built more than 100 years ago. Families line up to make their own candy bars and wander under the Kisses-shaped lampposts of Chocolate Avenue. Unlike many company towns across America, fading in the face of global competition, Hershey looks a paragon of health. Local pride and politics have kept the company off-limits to suitors for decades, yet the town’s branding as the sweetest place on earth is being challenged as never before. -
Squawk on the Street
Jul 14, 2016 | CNBC
Hershey Co. Trust and the offer from Mondelez discussed in Squawk on the Street. Listen to clip here: http://app.criticalmention.com/app/#clip/share/23454027?token=3305fdcd-3b28-458c-baa1-81bc01249de1 -
Report: Hershey Trust under pressure from AG's office; Mondelez still seeking deal
Jul 14, 2016 | Central Penn Business Journal
By Roger DuPuis
Talks between the Hershey Trust Co. and the Pennsylvania Attorney General's office over governance reforms are continuing, officials confirmed today, while media reports suggest talk of a Hershey Co. buyout are not dead. The Wall Street Journal today is reporting that the AG's office is threatening to take the trustees to court if they fail to carry out changes requested by the agency, which the paper says include changes in board composition and compensation. -
Hershey Trust Pressured to Expedite Governance Changes
Jul 14, 2016 | The Chronicle of Philanthropy
Pennsylvania’s attorney general is threatening to take trustees of the charity that controls Hershey Co. to court if they do not make changes in governance by the end of the month, The Wall Street Journal reports, citing unnamed people familiar with the matter. State regulators have been wrestling with the Hershey Trust over implementing reforms outlined in a 2013 agreement, particularly the departure of three long-serving trustees.
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Mondelez rides a Hershey rollercoaster
Jul 14, 2016 | Financial Times
By Lindsay Whipp
Screams from thrill seekers riding Hershey’s rollercoasters drift across the Pennsylvania town that Milton Hershey built more than 100 years ago. Families line up to make their own candy bars and wander under the Kisses-shaped lampposts of Chocolate Avenue.
Unlike many company towns across America, fading in the face of global competition, Hershey looks a paragon of health. Local pride and politics have kept the company off-limits to suitors for decades, yet the town’s branding as the sweetest place on earth is being challenged as never before.
Last month, the Hershey Company’s board rebuffed a $23bn offer from Mondelez International that would have put its Reese’s Peanut Butter Cups, Milk Duds and Oh Henry! bars under the same roof as Oreo, Milka and Cadbury.
The company’s fate rests in the hands of the Hershey Trust Company, which is run from Milton and Catherine Hershey’s former mansion, has three seats on the board and commands 80 per cent of the voting rights. But the trust is being investigated for the second time in six years by the state attorney-general, and analysts believe the turmoil may give Mondelez leverage to return with a higher offer — if Irene Rosenfeld, its chairman, can navigate local political obstacles.
“Hershey is a Pennsylvania company, a strong company, one that has always been intended to be here and I would take that stand going forward,” says Pennsylvania senator John Rafferty, a Republican who is running for attorney-general in November and says he “would not be” amenable to its sale. “I have seen companies take over companies and promise things, and within years they are dismantling [those promises]. Any agreement would almost have to be ironclad.”
His views matter because any sale must be ratified by the attorney-general’s office. Incumbent Kathleen Kane, embroiled in her own troubles, is not running for re-election and Democratic candidate Josh Shapiro did not respond to an interview request.
The attorney-general’s office is investigating whether the trust is breaching rules set in 2013 as the result of an earlier probe into concerns about excessive pay and spending, including its purchase of a golf course adjacent to the Hershey Industrial School, which the trust is meant to fund in perpetuity.
With $12bn in funds built up mainly from Hershey dividends of more than $150m annually, the trust is one of the world’s wealthiest educational endowments, just below Massachusetts Institute of Technology. Its core mandate is to provide for underprivileged children, and it spends $96,000 annually on each of its 2,000 students, covering tuition, medical care, clothes and food. The school, which has faced its own scandals in recent years, says the golf course was bought to provide land to house another 300 children.
As part of its probe, the attorney-general’s office is demanding that three trust board members who have served more than 10 years step down by the end of this month. Four other directors have already left, including Joan Steel, who this week relinquished her position after four years without giving a reason.
The trust says that it follows the rules “scrupulously”, and hopes to clear up the attorney-general’s concerns soon. The attorney-general’s office declined to comment.
The trust has faced other issues, spending a reported $3.6m to investigate insider trading claims to which it concluded there was “no substance”.
Its critics include Brad Reese, whose grandfather’s company, owned since 1965 by Hershey, has made the Reese brand a bigger seller than Hershey. “If the Hershey Trust Board no longer has a strategic vision for the future of The Hershey Company — ie the HB Reese Candy Company doing business as The Hershey Company — the Hershey Trust Board no longer deserves to own a controlling interest in The Hershey Company,” he charges.
Senator Rafferty says the trust appears to be among several state organisations “that seem to have lost their vision of focus”.
Controversy over how broadly to interpret the trust’s role in the wider community beyond the school has flared up before, such as when the trust allocated millions of dollars to establish the Penn State Milton S Hershey Medical Center in the 1960s. When the trust entertained bids from Wrigley and a Cadbury-Nestlé team in 2002, which could have diversified its funding, the move was stymied by the attorney-general and a local court, which deemed that a sale would damage the local economy.
Many locals would not like to see Hershey sold for nostalgic reasons, but they admit that times are very different from 14 years ago. The chocolate company has moved some work to Mexico and now provides 4,500 jobs in town, while the medical centre employs 10,000 and more than 9,000 work for the entertainment company in high season.
“There’s been a lot of changes over the past 10-15 years,” says Donna Jones, a supervisor at a clothing store near the theme park. “The park is expanding every year with new attractions, the outlets are getting high-end stores.”
Down the road in another store, Stephanie Watts says it would not bother her if the company was sold, though she did not want it to result in any job losses. Whatever happens next to Milton Hershey’s company and the trust that occupies his mansion, the thrill seekers may remain happily impervious for years to come.
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Jul 14, 2016 | CNBC
Listen to clip here: http://app.criticalmention.com/app/#clip/share/23454027?token=3305fdcd-3b28-458c-baa1-81bc01249de1
David Faber: Carl mentioned Mondelez and Hershey, worth just updating people. Really not that much to share here. We will hit this and Monsanto. On Hershey of course we've still been waiting to see whether Mondelez will come back with a higher offer, that does seem to be a possibility. But so much of this, in fact all of it, comes back to the Hershey trust where there has been a great deal of focus by some others and there have been some changes in who sits on that trust. Still a lot of people doubt whether or not you would actually be able to get to a deal here first having to get through the board with an appropriate price, remember $107 certainly was not that, half cash and half stock as we reported. But, you know, in trying to understand the dynamic going on here, people familiar with the situation indicate there had been certainly many talks between Hershey and Mondelez and that the management at Hershey perhaps may have believed now was a good time to see whether there might be an opportunity to sell and / or because they thought that they could get the approval of the trust. That remains very much unclear.
Jim Cramer: That’s very contrary to what we know, David.
Faber: That's very much unclear. Now Mondelez finds itself in the position after having been rebuffed so strongly by the board of directors at Hershey in some way hoping that the trust might weigh in and say will you change your mind if they come with a higher bid, that may be fanciful thinking on the part of Mondelez. But it is fair to say they have not and we haven't heard anything from the company but people close to the situation indicate there is certainly a possibility they will try one more time at least to raise the offer, see if they can get there. As we reported on that day when it first became public they had already made those other offers to the trust to try to get that approval. Namely moving the chocolate business headquarters to Hershey, Pennsylvania, guaranteeing jobs in the state and changing the name of the company to Hershey. We will see. That one is not over.
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Report: Hershey Trust under pressure from AG's office; Mondelez still seeking deal
Jul 14, 2016 | Central Penn Business Journal
By Roger DuPuis
Talks between the Hershey Trust Co. and the Pennsylvania Attorney General's office over governance reforms are continuing, officials confirmed today, while media reports suggest talk of a Hershey Co. buyout are not dead.
The Wall Street Journal today is reporting that the AG's office is threatening to take the trustees to court if they fail to carry out changes requested by the agency, which the paper says include changes in board composition and compensation.
The trust is The Hershey Co.'s main stockholder, controlling more than 80 percent of the company's voting shares. Under Pennsylvania law, the state Attorney General would have a say in any change of ownership.
Hershey's board on June 30 rejected a $23 billion purchase proposal from Illinois-based Mondelez International, a Kraft Foods spinoff whose brands include Oreo Cookies.
Three members of the trust's board also sit on the board of Dauphin County-based Hershey Co., trust spokesman Kent Jarrell confirmed.
The WSJ also is reporting that Mondelez has not dropped its pursuit.
Hershey spokesman Jeff Beckman said this morning that he could not speak to that issue.
"You would have to ask them what their plans are," Beckman told CPBJ.
Mondelez spokesman Michael Mitchell acknowledged the existence of the original offer, but declined to comment on whether the company is still interested in Hershey.
"We believe that situations like these are handled best through private communications between companies. So we will not comment further at this time," Mitchell said.
Trust issues
Regarding talks with the AG's office, Jarrell confirmed that they are ongoing and that the trust hopes for a resolution, but "that is all I can say," he concluded.
Milton Hershey, who founded the chocolate company that bears his name, established the trust in 1905. The 10-member panel has responsibility for the Milton Hershey School Trust, The M.S. Hershey Foundation Trust and the Hershey Cemetery Trust.
AG's office spokesman Jeffrey Johnson also confirmed talks with the trust, though not the specifics of their content.
"We are working to make sure the mission of Milton Hershey is fulfilled. Our goal is to achieve a long-term solution that will ensure that occurs," Johnson said.
"Aside from that, I can only say that our investigation of this matter is ongoing. Our role in the process is to ensure that charitable assets are being used appropriately."
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Hershey Trust Pressured to Expedite Governance Changes
Jul 14, 2016 | The Chronicle of Philanthropy
Pennsylvania’s attorney general is threatening to take trustees of the charity that controls Hershey Co. to court if they do not make changes in governance by the end of the month, The Wall Street Journal reports, citing unnamed people familiar with the matter. State regulators have been wrestling with the Hershey Trust over implementing reforms outlined in a 2013 agreement, particularly the departure of three long-serving trustees.
The regulatory wrangling could present a distraction at a pivotal time for the trust, which faces a possible bid to take over Hershey Co., according to the Journal. The board recently rejected a $23 billion offer for the chocolate company from snack-food giant Mondelez International, but sources tell the newspaper Mondelez could renew its pursuit if it sees an opening.
The trust was established more than a century ago to fund and operate the Milton Hershey School for needy children. It is one of the country’s richest charities, with an endowment of $12.1 billion, but has been the subject of numerous state investigations into its governance and spending on property and pay and perks for board members. Along with possible legal action on reform, Pennsylvania could have a say in a Hershey Co. sale under a quirk in state law that would require trustees to prove in court that the deal serves the charity’s best interests.
A Hershey Trust spokesman said the board is in talks with the attorney general’s office and hopes to reach a resolution.
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