Hershey Severance Pay Could be Kiss(es) of Death

August 19, 2002 (PLANSPONSOR.com) - Rich severance packages could give potential Hershey Foods suitors indigestion, according to published reports.

Quoting a weekend report in the Times of London ) , Reuters said that severance benefits due 14,000 workers could add $400 million to the deal’s price tag.  That would represent up to three times the workers’ base salary and last for 24 months after a purchase deal goes through.

For a buyer intending to cut employees to cut costs, the extra severance payments burden could be a deal breaker, the report added.

Hershey, the maker of Hershey’s chocolate bars and other well-known brands, was put up for sale by the Milton Hershey School Trust, a charitable organization that controls 77% of Hershey’s voting power.

Analysts speculated that Hershey’s could fetch $12 billion or more, with Nestle and Kraft Foods seen as likely bidders.