Attorney General
Then there’s the little detail that the Pennsylvania attorney general has the right to review a deal to acquire the candy maker. That’s because the trust is legally obligated to continue financing the Milton Hershey School, and since the trust is supported by profits from the chocolate company, the state can try to stop a sale if it determines that school funding is threatened.
The trust has been the subject of allegations in recent years of lavish spending by board members. The state attorney general recently sought the resignation of three board members and asked the trust to reduce board compensation, the Philadelphia Inquirer reported.
Wire Fraud
Trust executive John Estey, a one-time aide to Pennsylvania Governor Edward Rendell, was fired in April after pleading guilty to wire fraud associated with campaign contributions.
With all the controversy at the trust, Mondelez emerged with a bid to take over Hershey at $107 a share.
“I think Mondelez appreciates that the trust’s board has been weakened, and given how protective of Hershey’s interests the trust has been, now is the time, if ever, to swoop in,” said Asit Sharma, an analyst at the Motley Fool. “We can expect an adjusted offer in the near future, which will be more difficult for the board to reject unanimously as shareholders clearly support the idea of a merger.”