(Refiling to fix typographical error in 3rd paragraph -- 'buy'
instead of 'by')
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CHICAGO, June 16 The chairman of the trust that
has voting control over Hershey Co (HSY.N) said change is
needed to boost the company's performance and improve the
largest U.S. chocolate maker's position for long-term growth,
but he ruled out a sale of the company.
Hershey Trust Chairman LeRoy Zimmerman said the trust,
which controls 78 percent of the voting stock in the company,
had hired merger-and-acquisition advisers more than a year ago
to look at strategic options for Hershey.
Hershey shares fell more than 6 percent on Monday to their
lowest since April 25, just days before Hershey rival Mars Inc
said it would buy Wm Wrigley Jr Co WWY.N, which raised
speculation Hershey might need to merge or form a joint venture
to compete with Mars.
Hershey management is scheduled to meet with analysts on
Tuesday to update them on the company's strategy.
"Transformational merger-and-acquisition transactions are
but one of multiple strategic growth options the trust has been
continually assessing, in coordination with the company board,
as part of the trust's ongoing process and due diligence,"
Zimmerman wrote in an opinion piece published Sunday in the
Harrisburg, Pennsylvania Patriot-News.
Zimmerman also repeated that the Trust will not, and legally
could not, give up its control of the company.
"The trust is committed to retaining its controlling
interest in the company," he wrote. "This is first and foremost
a principle grounded in Milton Hershey's philanthropic legacy.
It also is rooted in constraints of Pennsylvania law and
practical business imperatives. Simply put: We will not sell
The Hershey Co."
The Hershey Trust, which despite its control of the company
holds shares representing only about 30 percent of the economic
interest in Hershey Co, was established by Hershey founder
Milton Hershey to serve as trustee for the boarding school that
bears the Hershey name.
Last year the trust, unhappy with the financial performance
of Hershey, arranged an overhaul of Hershey's board.
In the wake of the Mars-Wrigley agreement, analysts have
said Hershey needs to make some sort of alliance with another
company to better compete with Mars, which will become the
world's largest candy company.
But the Trust's stance that it must maintain control of
Hershey likely precludes a takeover by a company such as
Cadbury Plc CBRY.L. Instead, Hershey may need to opt for a
joint venture with another company to help grow its
international business, analysts said.
Zimmerman's remarks on Sunday appear to allow for such a
move, although he said the question of what growth options the
company will pursue is "an ongoing matter."
"There are meaningful options for dynamic long-term
strategic growth that do not require selling the company. And
it is toward those options that the trust and the company board
are focused," he wrote.
Hershey shares were down $2.36 at $35.97 on Monday
afternoon on the New York Stock Exchange.
(Reporting by Brad Dorfman; editing by John Wallace and Andre