Hershey Foods said late Tuesday night it was informed by the Hershey Trust Company that its directors had rejected all bids received for the firm and asked company executives to “end the process of exploring a sale” following a 10-hour meeting.
That decision came despite the fact that the company was on the verge of accepting a $12.5 billion cash-and-stock offer from the Wm. Wrigley Jr. Company, according to the New York Times, citing executives close to the negotiations.
According to the Times, Hershey’s board had planned to meet today to vote to accept Wrigley’s offer, valued at $89 a share – a 42% premium over Hershey’s stock price before the company was put up for sale.
Published reports said the Hershey board was planning to meet yesterday to accept the cash and stock offer, which was much higher than most investors had expected. Reports in both the New York Times and the Wall Street Journal say Wrigley had agreed to rename itself Wrigley Hershey and keep local Hershey factories open.
Published reports note that the Hershey trustees had been overwhelmed by the outcry of protest from the community since the July announcement that it was considering selling its 77% stake in the chocolate maker to diversify the trust’s $5.9 billion base of assets.
Those assets protect the financing for its main beneficiary, the Milton Hershey School. Roughly 58% of its assets are currently tied up in the chocolate maker.
State Attorney General Mike Fisher, a Republican who is running for governor in the Keystone State, had filed suit to block the potential sale, arguing that such a deal could pose irreparable harm to Hershey’s hometown community in central Pennsylvania
Fisher’s stance was viewed with some irony by some trustees who had felt pressured by the attorney general’s office to put the company up for sale last December.
The trust, pushed by its four-member investment committee, interpreted that to mean that it had to sell the company — something the attorney general has denied, according to the Wall Street Journal.
Now the trust plans to consider a stock buyback program, a person close to the company said.