Tuesday, October 9, 2007

Sweet deal for Hershey's?

The WSJ had leaked the news of a possible buyout of Hershey's (HSY 46.05) on July 25, 2002 with these headlines: "The sweetest place on earth may lose it's sugar daddy." In August, with the town in an uproar, the Harrisburg paper quoted 102 years young Monroe Stover who said, "Mr. Hershey would never have considered" the sale of Hershey's, and Wrigley's walked away, as the Hershey trust balked.

Today, five years later the WSJ had this statement from the Hershey Trust..."the Trust is not satisfied with the Company's results. The Company has been underperforming both the market and its own stated expectations. The Trust's holdings in The Hershey Company, on behalf of the children it serves, have lost more than $1 billion in market value during this period of unsatisfactory performance..."

Further news was that the Hershey Trust had discussions with Cadbury without then CEO Lenny knowing about it, a month before he announced his retirement.

It appears they were looking to structure a deal without diluting the interest of the trust. Reminds me of when the WSJ sold themselves to News Corp. while getting editorial assurances.

Hershey PA is a beautiful slice of picturesque, quaint, and wonderful Americana. With it's chocolate kiss streetlights, rolling gardens, and the intoxicating aroma of chocolate it's also a romantic honeymoon destination. It really is a special town, and the market is incorrectly valuing the company's intrinsic worth.

But if the Heshey's Trust wants to sell or build, in my mind, there is only one person in the world that could buy Hershey’s and give it the autonomy it deserves to continue to allow it to grow, while aligning everyone’s interests from the shareholders to the Hershey trust, and to the workers and to the people in the communities where Hershey’s has its plants. And there is only one person that would have the reputation and influence that would bring all these people together, to unite them, and to make them happy.

And that would be Warren E. Buffett, my choice for "the sugar daddy of the sweetest place on earth."

Maybe the Hershey Trust should give him a call.

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