Tuesday’s decision by Judge Warren Morgan of Pennsylvania's Dauphin County Orphans’ Court to temporarily freeze the sale of Hershey Foods [WAMN: 05-Sep-02], sent the company’s shares on the New York Stock Exchange into micro-freefall, ending the day’s trading 4% down at $72.51 (€73.04; £46.59) before recovering at Thursday’s close to $74.30.
This is significantly below the $85 per share that The Milton Hershey School Trust hope to raise from selling the company. Although the trust holds only 31% of Hershey’s stock, it commands 77% of the voting rights thanks to the complex structure under which the company’s IPO in 1927 was set-up.
The Orphans’ Court ruling remains in place only until today (Friday) when a second suit filed by The Milton Hershey School Alumni Association, representing the orphan school’s former pupils, will be heard. This will argue that the trust has more than ample funds and hence no need to sell its stock.
Attorney Ric Fouad, president of the association, will ask Judge Morgan to allow it to intervene. “We're looking at it on behalf of the students,” says Fouad. “Given how much money the trust has, there's no prudent reason to sell.”
The present injunction does not prevent Hershey management – acting on behalf of the trust – from continuing negotiations with the various parties interested in acquiring all (or a slice) of Hershey.
Data sourced from: USA Today; additional content by WARC staff