Almost two months after Hershey Foods Corporation put itself up for sale - a move that triggered protests and fears of plant closings - board members of the charitable trust that controls the company said late Tuesday said they are scrapping the plan to sell what is the nation's largest candy maker.
"The trust board has rejected all the bids that it received," Hershey Trust Co. spokesman Rick Kelly said late Tuesday, reading a statement from the trustees. "It is asking the company to end the process of exploring the sale."
Even so, the board had been close to selling the company for $12.5 billion to Wrigley before changing its mind, The Wall Street Journal reported Wednesday, citing people familiar with the situation.
Kelly confirmed that Wrigley was a bidder for Hershey, but he would not provide more details on the matter.
Hershey Foods, the nation's largest chocolate and confectionary maker, had been expected by industry analysts to receive bids in excess of $10 billion from companies such as Nestle, Kraft Foods, and Cadbury Schweppes.
The trust had been under fire from Pennsylvania's political and business leaders, who said the interests of the community would be pushed aside in any sale.
All 17 trustees met behind closed doors in a suburban Philadelphia hotel Tuesday to conduct regular board business and discuss the secretive process of seeking bids on its controlling stake in the company.
"This is the culmination of months and months of reviewing the diversification options," Kelly said.
The $5.9 billion trust, which controls 77 percent of the company's shareholder votes and 31 percent of its common stock, announced July 25 that it had ordered Hershey Foods executives to seek bids on its stake.
The trust, whose sole beneficiary is the Milton Hershey School for disadvantaged children, said it was looking to protect its investments. More than half the trust's assets are invested in the stock, and board members say the trust could be hurt if the company's finances falter.
The potential sale, however, had sparked protests from the public and politicians, who said the interests of the community would be pushed aside in any sale.
State Attorney General Mike Fisher had petitioned the judge to require the trust to seek court approval before it could sell the candy maker.
He later won a court injunction blocking any transaction until a judge could determine whether a final deal required court approval. The trust appealed the injunction, which remains in place, but a higher court has yet to rule.
In Hershey, residents, employees and former employees spent the past seven weeks circulating petitions, staging "Derail the Sale" rallies, and posting signs on front lawns, hoping to dissuade the trustees - most of whom do not live locally - from selling the company.
"I said at one point that it was the soul of this community and I for one am pleased that Hershey has taken another look at this," said August "Skip" Memmi, the chairman of the supervisors of Derry Township, the municipality inside of which the unincorporated village of Hershey sits.
Chocolate magnate Milton S. Hershey created the Hershey Chocolate Co. in 1894 as a subsidiary of his Lancaster Caramel Co. He later sold the caramel operation and began making chocolate in 1905 in what is now known as Hershey in the Chocolate Avenue plant that still stands today.
Many retirees and current employees live in the central Pennsylvania town of about 13,000, which is dominated by the buildings Hershey erected, including a hotel, an amusement park, botanic gardens and a theater.
The company is the maker of popular chocolate products such as Hershey's Kisses, the Hershey Chocolate bar and various Reese's products, and had revenue of $4.6 billion last year.
News of the possible sale had surprised some analysts, who thought Hershey's profitability and its close relationship with the town, the trust and the school made it untouchable.
"They ran into so much turmoil around it," said Samuel Weaver, professor of finance at Lehigh University and former director of financial planning and analysis at Hershey Foods. "I would really like to know all the back room stuff that was going on."