Nestlé will have to stop licking its lips, at least for the short term. State Judge Warren Morgan issued a temporary restraining order on Sept. 4 halting the sale of Hershey Foods. The Hershey Trust Co.-which owns 77 percent of the confectionery giant-says it will appeal the decision.
The sale of the Hershey, PA-based candy maker is proving to be sticky business. Since announcing it was placing the company on the auction block last month, The Hershey Trust Co. has faced a firestorm of resistance from workers and the Hershey community. That prompted Pennsylvania Attorney General Mike Fisher (a candidate for governor) to file a motion to block the sale. The case was heard in Harrisburg, PA, by the Dauphin County Orphans Court which oversees legal proceedings regarding trusts. The Hershey Trust oversees a $5.9 billion trust fund for the Milton Hershey School for disadvantaged children established by company founder Milton Hershey.
Nestlé spokesperson Marcel Rubin had previously told Reuters that regardless of the ruling, the court case “is certainly not the final step.” Still, opposition isn’t coming just from Hershey: Analysts have criticized the $11.5 billion bid Nestlé has reportedly made for Hershey, saying such a price would seriously harm Nestlé’s credit rating. Nestlé’s shares dropped 10 percent, then bounced back after ceo Peter Brabeck insisted the company wouldn’t spend more than $12 billion on Hershey. Either way, the acquisition would most likely surpass Nestlé’s $10 billion purchase of Ralston Purina last year. There are likely to be more twists and turns down the road. In addition to the upcoming court battle, reports have circulated that Nestlé and rival Cadbury-Schweppes were in discussions about sharing the brands of Hershey Foods. Kraft Foods, Glenview, IL, was also said to be considering a bid.
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