- The Washington Times - Thursday, September 5, 2002

HARRISBURG, Pa. (AP) A state judge barred any sale of Hershey Foods Corp. until the court resolves a challenge by the state attorney general on grounds that a sale of the candy maker could irreparably harm the community.
A spokesman for the charitable trust that controls Hershey Foods said it would appeal yesterday's ruling by Judge Warren G. Morgan.
"We're disappointed in the decision," said Rick Kelly, a spokesman for the Hershey Trust Co., which controls 31 percent of Hershey Foods stock and 77 percent of the Hershey Foods voting stock.
The Hershey Trust Co. has until Monday to submit a written response to the underlying petition.
The order is to last only until Judge Morgan can rule on an underlying petition by Attorney General Mike Fisher on whether the court should review a sale of the nation's largest chocolate candy maker, if and when a deal is proposed.
Mr. Fisher, who sought the order, has opposed any sale to an outside company, contending that the loss of jobs and tax revenue could devastate the Hershey area, where about 6,200 persons work for the company.
Lawyers for the Hershey Trust Co. and Milton Hershey School, the trust's sole beneficiary, argue that Mr. Fisher has gone beyond the law to stop the sale and he has failed to show that a sale would damage the area's economy.
"I am pleased the judge has stopped the sale to give us a chance to raise these issues," he said. "We need to step back and take a hard look at how a sale of Hershey Foods would affect the Hershey community. There is no reason for the trust and its board to rush out and sell this company without allowing me to represent the public's interest and allowing the court to determine how a sale could hurt this community."
Hershey put itself on the block in July.
The ruling comes as officials from Chocolate Workers Local 464 report that groups of people believed to be representing potential buyers have toured two plants in Hershey in recent days. Analysts have speculated that Nestle, Kraft Foods and Cadbury Schweppes are suitors of Hershey.
The company declined to comment.
Meanwhile, the candy maker's stock dropped $3.09, or 4 percent, to $72.51 after news of the injunction. One analyst, George Askew of Legg Mason, noted that the injunction "adds another layer of uncertainty" to the sale process.
The Hershey Trust Co. manages a $5.9 billion trust fund that finances the Milton Hershey School for disadvantaged children, the closest thing to an heir to the wealth of childless chocolate magnate Milton Hershey, who died in 1945.
Mr. Fisher has said he was alarmed at the pace that the company appeared to be seeking a sale, and wanted to give the judge time to rule on his petition seeking a review of a sale of the candy maker.
Before then, he hopes lawmakers will have time to consider a change to the charitable-trusts law that he is drafting.
That proposed change would allow trustees to consider the interests of a community before selling the controlling stake in a for-profit company, thereby releasing them from their perceived duty as trustees to maximize the value of the trust's assets.
The Hershey Trust Co. on July 25 announced that it had ordered Hershey Foods executives to seek bids on the company in an effort to diversify the trust's holdings and protect the funding source for the Milton Hershey School, which educates and shelters nearly 1,300 students.
An attorney for the Hershey Trust Co. and Milton Hershey School, Jack Stover, argued before Judge Morgan on Tuesday that "under prevailing law, the Attorney General's Office has no authority to ask for the temporary injunction."
He also said that bidders would get cold feet if the sale process were delayed or if the confidentiality of the process was compromised.
Jerry Pappert, the state's first deputy attorney general, argued that the delay would not interfere with a sale process or force potential buyers to forfeit information about their bid.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide