Even as Pennsylvania lawmakers move forward in attempts to halt the sale of the chocolate maker, Hershey Foods said on Thursday that it had received an unsolicited mini-tender offer to buy less than 2 per cent of the company.
The bid from TRC Capital to buy up to 1.75 million shares of Hershey for $70.25 a share offers a discount from the stock's closing price of $74.09 on the New York Stock Exchange, Hershey Foods said in a prepared statement. The company said it "strongly recommends" shareholders reject the offer.
Hershey stock climbed more than 35 per cent after the company's controlling shareholder, Hershey Trust, disclosed last month it was considering a sale of the confectionery maker as a way to diversify the trust's holdings. The trust controls 77 per cent of Hershey's voting shares.
Hershey said that Toronto-based investment firm TRC Capital does not have the financial resources to complete the deal. TRC Capital is known for making low-priced mini-tenders, having bid on such companies as Goodyear Tire & Rubber cosmetics maker Estee Lauder and US energy group DPL.
Mini tenders seek to make a fast profit by buying less than 5 per cent of a company's stock and avoiding certain disclosure and regulatory requirements. Unlike larger, traditional tender offers, mini-tenders do not usually offer sellers a premium above market price.
The offer comes as Wall Street awaits the start of strategic bidding to acquire the company by big food makers such as Kraft Foods and Nestle, despite much public opposition to a sale.
State lawmakers said earlier on Thursday that they are working with Pennsylvania Attorney General Mike Fisher to craft a bill that would enable the trust to cancel its plan to sell the company while still upholding its own fiduciary duties.
The trust's exploration of a sale has spurred fears of job economic turmoil, including job layoffs and plant closures in Hershey, Pennsylvania, the company's hometown.
Republican state Senate Majority Leader David Brightbill told Reuters that proposed legislation could be ready by the time the Pennsylvania Assembly meets in special session on September 4th but predicted that a more likely deadline for action would be early October.
"We are working with the attorney general on this. He's our leader," the senator said.