In a dramatic eleventh-hour development that recalls the golden days of Hollywood when Frank Capra feelgood movies such as Mr Smith Goes to Washington ruled the box office, The Milton Hershey School Trust last evening (Tuesday) overturned its own decision to auction Hershey Foods to the highest bidder.
The trust, set up by the company’s founder Milton Hershey for the benefit of local orphans and the eponymous company town, had called the auction believing it needed to diversify its holdings beyond Hershey stock. 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.
And despite a Niagara of local and national opposition, the trust was poised until last night to accept a $12.5 billion offer from the William Wrigley Jnr Company – the family-owned chewing gum giant. The cancellation of one of the largest auctions of a publicly traded company was branded by the Wall Street Journal as “stunning”.
A statement issued last night by the seventeen-strong trust board read: “The trust board has rejected all the bids that it received. It is asking the company to end the process of exploring the sale. This is the culmination of months and months of reviewing the diversification options.”
According to an insider: “It was an emotional meeting. Everybody had given the issue a great deal of thought.” But perhaps the thought uppermost in trustees’ minds was that a sale could possibly result in personal legal liability under the terms of the trust and in the light of legal actions taken to halt the auction.
Hollywood would have loved it. The machinations of big business – some of it foreign – defeated by honest, unsophisticated small-town folk led by a couple of crusading attorneys.
Capra would have no difficulty in casting the movie: Gary Cooper as Mike Fisher, the Pennsylvania state attorney general (who also happens to be running for governor); James Stewart as Ric Fouad, president of The Milton Hershey School Alumni Association, a local-boy-made-good and now a Big City lawyer representing the orphan school’s former pupils association. And possibly June Allyson as the girl who loves them both.
The William Wrigley Jnr Company couldn't be reached for comment.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff