- Hershey Trust Co., Hershey's largest stakeholder, has agreed to settlement terms with Pennsylvania's attorney general, who has been investigating the trust's board on accusations of overcompensation and conflicts of interest.
- Both parties are drafting the legal outline of the settlement terms, which include resignations of three trust board members by the end of the year, people familiar with the matter told Reuters.
- A shakeup at the board level of the trust, which controls 81% of Hershey's voting power, could impact the future of the company, particularly regarding a potential sale. Hershey turned down a $23 billion takeover offer from Mondelez earlier this month.
Experts believe that an overhaul of the trust's board, three members of which sit on Hershey's corporate board, could influence future decisions on takeover bids by Mondelez or any other company. Nestle and Kraft Heinz have both surfaced as speculated potential buyers.
But analysts believe that Mondelez is likely to return with a higher offer once the dust settles from the investigation and the trust's negotiations with the attorney general. Mondelez could have more leverage with new faces on the board, particularly if they don't have personal ties to the state.
However, a new set of trust board members isn't enough to make a Hershey sale a done deal for any buyer. The trust is legally obligated to act in the best interests of the Milton Hershey School for underprivileged children, which operates on proceeds from the trust’s investments. Experts argue that a sale could benefit the school through diversification of the trust’s assets, which currently depend heavily on Hershey's stock and profits.
The Pennsylvania attorney general has final say on any deal regarding a sale of the company. The AG's office has oversight powers over the Hershey Trust and can bring the issue to court if the office believes the deal could negatively impact the local economy.
However, even that scenario isn't clear-cut. The current AG's legal license was revoked, and she will not be running for re-election in November, Reuters reported. If Mondelez or another buyer puts in a higher offer, she wouldn't have to answer to voters for her final decision in the upcoming election.