Hershey to argue against injunction
HARRISBURG, Pa. (AP) – The charitable trust that owns Hershey Foods Corp. will have a chance next week to argue its appeal of a temporary court injunction on a possible sale of the nation’s largest candy maker. The injunction was put in place Wednesday by a Dauphin County Orphans Court judge after the state attorney general expressed alarm that a sale could go through without court approval and cause massive layoffs in the candy maker’s hometown of Hershey.
The state’s opposition has created uncertainty about the sale and caused Hershey Foods stock to fluctuate on the New York Stock Exchange. On Thursday, the stock rebounded slightly, moving up 2.5 percent, or $1.79, to $74,30, a day after it slid 4 percent on news of the injunction.
Arguments on the immediate appeal by the Hershey Trust Co., which controls the majority stake in the candy maker on behalf of the Milton Hershey School for disadvantaged youths, were scheduled to be heard in the state Commonwealth Court on Wednesday.
The state attorney general’s office pledged to oppose the appeal.
The same day, Judge Warren G. Morgan, who ordered the injunction, will hear trust company arguments to reconsider his decision.
The injunction is to last only until Morgan can rule on an underlying petition by Pennsylvania Attorney General Mike Fisher asking that a sale, if it happens, be subject to court approval.
Also Thursday, the chairman of the House Judiciary Committee told Federal Trade Commission Chairman Timothy J. Murris to keep a close eye on Hershey.
A sale by the trust company “will likely exceed $10 billion and trigger federal antitrust review,” Judiciary Chairman F. James Sensenbrenner, R-Wis. wrote. “As a result, I urge the FTC to rigorously examine the antitrust implications of any sale of Hershey Foods.”
Sensenbrenner’s letter came at the urging of Rep. George Gekas, a Republican whose district includes Hershey.
A sale could prompt a Judiciary Committee investigation or hearings, Gekas spokesman Mike Shields said.
The FTC declined immediate comment.
Hershey Foods employs about 14,000, about 6,200 of whom are in the Hershey area, and had $4.6 billion in sales last year.
Companies expected to bid up to $15 billion on the candy maker include Nestle, Kraft Foods and Cadbury Schweppes.
Because the late chocolate magnate Milton Hershey placed his wealth in a charitable trust, the administrator of that trust, the Hershey Trust Co., is subject to state law. The attorney general’s office is charged with ensuring that the trust is administered in the spirit of the founding deed.
The 17 trustees voted to explore a sale of the controlling stake in Hershey Foods to diversify the $5.9 billion school trust fund, more than half of which is invested in the candy maker’s stock.
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