Preview Newsletter
Hershey Media Report 8/2/16
-
Road to Hershey Trust Deal Paved With 'Toxic' Board Battles
Aug 1, 2016 | The Chronicle of Philanthropy
In its DealBook column, The New York Times traces the web of business deals and board disputes that brought on last week’s agreement with Pennsylvania regulators to reform governance at the Hershey Trust. -
Hershey Trust settles governance issues – what does it mean for Mondelez?
Aug 2, 2016 | Just-Food
By Katy Askew
The Hershey Trust, which owns over 80% of the US confectioner's voting rights, has reached an agreement with the Pennsylvania Attorney General's office to settle concerns over its governance - and there could be consqeuences for Mondelez International's interest in the Reese's maker. -
Four Dividend Achievers Rewarding Shareholders With A Raise
Aug 1, 2016 | Value Walk
Brief mention of the Mondelez bid in the context of Hershey stock. Relevant portion pasted below. -
Varney & Company
Aug 1, 2016 | Fox Business News
View clip here: http://beta.criticalmention.com/app/#clip/view/23663364?token=1b06fb7c-70d7-4b4f-895c-816a1ed42336 -
WHYY Radio
Aug 2, 2016 |
Listen to clip here: http://beta.criticalmention.com/app/#clip/view/23663571?token=1b06fb7c-70d7-4b4f-895c-816a1ed42336
Trade Coverage
Broadcast Coverage
-
Road to Hershey Trust Deal Paved With 'Toxic' Board Battles
Aug 1, 2016 | The Chronicle of Philanthropy
In its DealBook column, The New York Times traces the web of business deals and board disputes that brought on last week’s agreement with Pennsylvania regulators to reform governance at the Hershey Trust.
On Friday, state Attorney General Kathleen Kane formally announced the pact with the $12 billion charity, which operates the Milton Hershey School for needy children and has a controlling stake in the Hershey Company, the world’s largest chocolate maker and target of a recent takeover bid, the Associated Press reports. The agreement will usher out five long-serving board members by the end of 2017 and sets term limits and compensation caps for trustees who have collected millions of dollars in pay and perks.
The Times article sets out the trust’s origins in the fortune and philanthropy of candy magnate Milton Hershey; its interlocking charitable and corporate structures; and controversies over board compensation, "toxic" internal squabbles, and the trust'spurchase of a failing golf course.
“While the [trust’s] money is earmarked explicitly for disadvantaged children, its fate is decided by grown-ups,” columnist David Segal writes. “And while they may care deeply about the school, at the same time some are being enriched financially, and others — mostly elected officials — have shown motivations more political and economic than scholastic.”
-
Hershey Trust settles governance issues – what does it mean for Mondelez?
Aug 2, 2016 | Just-Food
By Katy Askew
The Hershey Trust, which owns over 80% of the US confectioner's voting rights, has reached an agreement with the Pennsylvania Attorney General's office to settle concerns over its governance - and there could be consqeuences for Mondelez International's interest in the Reese's maker.
The affairs of the trust, set up by Hershey founder Milton Hershey to look after the interests of the Milton Hershey School, have been under scrutiny amid allegations over how its money is spent and it is governed. Last week, a deal was struck over how the trust is run and food industry watchers are weighing up what impact that could have on the ownership of the Hershey business, not least because the trust is said to have stymied two attempts to buy the chocolate maker in the last 15 years.
The compensation for members of the trust's board will now be subject to a "simplified calculation" that will see director pay reduced; three board members will retire this year with a further two will stand down at the end of next year; and the number of board members will increase from nine to 13.
Velma Redmond, chairman of the joint board for the Hershey Trust and the Milton Hershey School, wrote in an open letter: "The boards now move forward, working cohesively and collaboratively, as we direct, support and fulfil the ongoing mission of the Milton Hershey School."
The trust is believed to be a major stumbling block preventing Mondelez's takeover approach for Hershey from getting further consideration last month. And, while the bid was rejected, some have speculated Mondelez could be tempted to raise its offer price further.
Last week, Mondelez announced its second-quarter results and Irene Rosenfeld, the company's chairman and CEO, sought to head off any potential questions from analysts on the issue. "While I can confirm that we did make an offer to Hershey, as you would expect regarding any potential M&A activity, we have no additional comments to make," Rosenfeld said.
At Sanford Bernstein, analyst Alexia Howard suggested Rosenfeld's refusal to discuss Hershey meant Mondelez could be ready to return to the table. "We are concerned that management's silence on the Hershey issue might indicate they plan on making a new, higher bid. We would view any such bid negatively, especially if they turned to tax-inefficient asset sales to limit equity issuance and thus prevent a shareholder vote."
What does the agreement between the Hershey Trust and the Pennsylvania attorney general mean for Mondelez?
With a fresh board, it is possible the trust could be more amenable to a future takeover offer. Mondelez made a number of non-monetary concessions – such as relocation to Hershey, Pennsylvania, and changing the expanded company's corporate name to Hershey. The trust would also retain a stake in an enlarged business – although it would lose control of a business in which it has a majority of voting shares.
In some respects, selling up would make sense for the trust because it would enable it to diversify its interests. Hershey is, after all, struggling to maintain its top-line momentum and once again lowered its sales guidance last week. Access to Mondelez's distribution channels in emerging markets would be an obvious win for a brand already widely known around the world despite relatively limited distribution outside of a handful of focus markets.
While Hershey might be grappling with some strategic issues of its own right now, Redmond stood by the financial performance of the trust's investments.
"There is also encouraging news concerning Mr. and Mrs. Hershey's requirement that the school be provided with sustaining financial resources. The School Trust's income has nearly doubled in the last ten years despite steep declines in interest rates and a volatile investment market. The increased income is what has allowed us to serve so many more students over that time. This is especially important because unlike other school endowments, Mr. and Mrs. Hershey specifically restricted the School to spending only net investment income to fund the school's operations.
"Because the Deed of Trust mandates in perpetuity, we have to get it right in correctly managing assets. The board's continue to review the diversification profile of the School Trust assets with the assistance of expert outside advisors as well as the management of the Trust Company. We are satisfied that the asset portfolio is being managed by the Trust Company in a responsible manner, consistent with the 1909 Deed."
Despite all the changes at the Trust, Pablo Zuanic, an analyst with Susquehanna International Group, does not expect the trust's deal with the Attorney General will bode well for Mondelez's takeover ambitions in the near term. "Changes at the Hershey Trust, especially regarding five directors stepping down over time, and nine new ones coming in, will likely lead to better governance, and some day - we would assume - to proper asset diversification. But we have a hard time believing that this changing trust will decide to sell the stake in Hershey in the near term," he wrote yesterday.
-
Four Dividend Achievers Rewarding Shareholders With A Raise
Aug 1, 2016 | Value Walk
The Hershey Company (HSY) manufactures, imports, markets, distributes, and sells confectionery products. The company operates through two segments, North America, and International and Other. The company raised its quarterly dividend by 6% to 61.80 cents/share. This dividend growth stock has raised dividends for 7 years in a row. The ten year dividend growth rate is 9.20%/year. The stock is overvalued at 26 times forward earnings and yields 2.20%. The stock would be an interesting addition on dips below $85/share. This would be a reasonable entry price if the proposed acquisition of Hershey by Mondelez doesn’t go through.
-
Aug 1, 2016 | Fox Business News
View clip here: http://beta.criticalmention.com/app/#clip/view/23663364?token=1b06fb7c-70d7-4b4f-895c-816a1ed42336
Rough transcript: a look at hershey here it is slightly higher, a winner over the last 52 weeks up about 20%. this as hershey agrees with the state of Pennsylvania after an investigation to lower the compensation of the board members, also enact some term limits.
-
Aug 2, 2016 |
Listen to clip here: http://beta.criticalmention.com/app/#clip/view/23663571?token=1b06fb7c-70d7-4b4f-895c-816a1ed42336
Rough transcript: think hershey and sweet thoughts come to mind then there 13 pennsylvania a destination for thousands in turin atop the plant or play at hershey park less known the hershey trust yet it's considered to be the nation's . largest child charity because the finances and oversees the two thousand student milton hershey school founded in 1900 nine the trust is back in the news of late and it's at best a bittersweet turn of events and for that let's turn to byfernandez . philadelphia inquirer a staff writer and author of the chocolate trust bob welcome back to new works tonite . playstation will you . 6:11 PMlook last year did you have any idea that there'd be this addendum needed so soon afterwards absolutely not %hesitation the book came out in june and at that time that trust was descending into its latest scandal with %hesitation this board in fighting will lead listeners read the book to catch us up to twenty sixteen but here's a whole new turn of a right now this was %hesitation this is a remarkable %hesitation almost unthinkable %hesitation actions by and by a board in which the chairman of the board %hesitation bob cavanaugh last summer helped his son obtain a lucrative %hesitation internship at a at one of the trust money managers they have more than a billion dollars that %hesitation they these outside meant money managers manage his son obtain that internship for ten weeks is here in about thirteen thousand dollars and %hesitation when other board members heard about it they fell like that could have been a conflict of interest well that seems like it should be settled pretty easily %hesitation the there's do 6:12 PMalways you could maybe return the thirteen thousand dollars maybe not take the internship there there may things you could do short of the coming to public life well what they're getting the attention of the state attorney general's office will at the board did was they they went out and hired one of the world's most expensive law firms while gotcha all to look into whether this in turn just thirteen thousand dollar internship was appropriate and they build a cherry six hundred fifty thousand dollars for that thirteen thousand dollar internship yes while it and that that was a pretty big bill for a forum for what it might have been a sort of minor conflict of interest in ali that but the the six hundred fifty thousand dollar a report basically cleared the chairman but %hesitation that because all sorts of bad feelings on the board and by a late sit by september so %hesitation there were %hesitation %hesitation allegations of other problems that he was he made against other board members which then resulted in more internal investigations and %hesitation you know 6:13 PMkathleen cain said on friday at this point they run up four to five million dollars in outside legal bills investigating themselves what is kathleen cane effectively done attorney general cane announced on friday that she had reached agreement where five the bull five of the nine board members would resign over the next eighteen months %hesitation you know but the deal was i think you by most people is not not very strong for instance she did not ask for %hesitation the board members to to reimburse the the charity of course all the money is supposed to go for the school for impoverished children she did not ask them those board members to reimburse the charity for these for five million dollars worth of legal investigations on themselves investigating the cells i mean it's on her of meanwhile let's fold in what's happening in real time in terms of the takeover bid by and even larger food giant right so of hershey no chocolate industry and i don't make people my nephew where is actually declining it's been as i wrote %hesitation couple weeks ago 6:14 PMit's on the wane it's been declining about three percent a year in consumption so are the same time the cost of talk of a beans are going up going up and so the company %hesitation so %hesitation hershey's mostly u. s. company %hesitation and they've been of rumored to be for sale for some time and others have approach in two thousand two but %hesitation say about a month ago %hesitation it was made public that montel ease a very big company but mostly globally made a bid for a hundred seven dollars a share forhershey many people considered at all bit of sort of an entry point bid to sort of eh say hey we're interested in her she'd get the discussion going not to get too far in a politics but can a full fledged attorney general's investigation take place given what's going on in harrisburg with kathleen fair probably not i mean i think that even a a powerful attorney general who was in under this cloud and politically we can like she is a powerful tornado would have trouble taking on this in dollar charity that has a almost limitless legal resources i mean this non profit section in the age he's office has a few people and %hesitation %hesitation %hesitation data and and they they would have to if they're really to challenge and they have to take on the court that's briefs that's you know while they're also trying to look at all the other charities in the state most people believe they couldn't do it for uses nearly an addendum are you ready to put out chocolate trust to a i don't think i've written loyalist hershey story the helen's will have you back on the air at some point as well bob fernandez thanks for joining us on news works tonight thank you thank you dave bob fernandez hill of inquirer staff writer and author of the chocolate
Trade Coverage
Broadcast Coverage
Add recipients
Suggested