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Plans for Hershey Sale a Dud

Hershey Foods Corp.(NYSE: HSY), the bane of dieters and dentists the world over, announced it's no longer for sale. In July, the company's largest shareholder -- the Hershey Trust Company, which holds 31% of the common shares and 77% of the voting stock -- ordered the chocolate-maker's management to look for a buyer of the trust's shares. However, in the face of local outrage and a state injunction, the trust's board cancelled the order.

There was no shortage of sweet tooths for the company. According to The Wall Street Journal, gum dealer Wrigley(NYSE: WWY) offered $12.5 billion for Hershey. Kraft Foods(NYSE: KFT), Cadbury Schweppes(NYSE: CSG), and Nestlé were also reportedly interested in mixing their foodstuffs with Hershey's chocolate.

The directors of the Hershey Trust, whose sole beneficiary is the Milton Hershey School for disadvantaged students, claimed they wanted to diversity the trust's portfolio, more than half of which is in Hershey stock. Any financial planner worth his weight in suspenders will tell you that's too much reliance on one company.

So, to some degree, the trustees were just doing their jobs: They were protecting the financial future of the Hershey school in case the Hershey company stumbled. However, they did turn down an offer from the company to buy half the trust's shares at a premium and purchase the rest at market prices over the subsequent three to five years. A spokesman for the trust would not say whether the trust will reconsider the offer.

The potential sale of the company caused an uproar, due to the company's importance to Pennsylvania and its storied place in the history of American business.

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