Hershey Foods Corporation: Bitter Times in a Sweet Place

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Case

Reference no. UVA-F-1409

Subject category: Finance, Accounting and Control

Authors: Kenneth M Eades (Darden School of Business, University of Virginia); Samuel Weaver (Lehigh University); Chris Muscarella (Darden School of Business, University of Virginia); Gustavo Rodriguez (Darden School of Business, University of Virginia); Sean Carr (Darden School of Business, University of Virginia)

Published by: Darden Business Publishing

Originally published in: 2004

Version: 30 April 2018

Revision date: 14-May-2018

Length: 20 pages

Topics: Mergers and acquisitions; Corporate finance; Firm valuation; Corporate governance; Agency problem; Finance:corporate finance

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Abstract

The proposed sale of Hershey Foods during the summer of 2002 captured headlines and imaginations. Six months after making its decision to explore a potential sale, the board of the Hershey Trust Company was examining two serious offers: a joint bid from Cadbury Schweppes PLC and Nestle SA, and an independent bid from the Wm. Wrigley Jr Company. In essence, the board faced both an economic and a governance decision. On the economic side, the board needed to determine the value of Hershey as a stand-alone entity compared with the bids being offered. On the governance side, the board needed to decide whether selling Hershey compromised the board's original mandate from Milton Hershey. A teaching note is available for registered faculty; media supplements and faculty and student Excel spreadsheets are available to enhance student learning.

Industry:

Food/beverage