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Pennsylvania Attorney General Mike Fisher said Wednesday that the Pennsylvania Commonwealth Court had voted 4-1 to uphold an injunction on the sale of Hershey Foods Co. Legal experts had expected the Commonwealth Court to uphold the injunction, but had anticipated that eventually it would go up to the state supreme court, which would overturn it. The news raised the possibility that The Hershey Trust Co. got wind of the decision ahead of its own vote Tuesday to cancel the sale of the chocolate maker following a two-month auction that produced a $12.5 billion offer from William Wrigley Jr. Co. and a $10.2 billion joint bid from Nestl� SA and Cadbury Schweppes plc. Hershey Trust officials didn’t return calls. The court released the decision 7 a.m. Wednesday, the first of a two-day meeting of the Trust that controls 77 percent of Hershey. If the sudden decision to halt the auction was a surprise, so, too, were new details about the bids, particularly Wrigley’s offer to buy Hershey. And the low-ball offer from Nestl� and Cadbury Schweppes countered expectations that Nestl� would bid upwards of $11 billion. Wrigley offered $12.5 billion, or $89 per share, in cash and shares. Chicago-based Wrigley is likely to have offered no more than 35 percent in cash and would have been stretched to offer more cash, according to food bankers. The gum maker did not return calls. Nestl� and Cadbury offered $10.2 billion or $75 per share offer in cash. Though the Wrigley offer was at the high end, it may not have given the Trust the diversification it needed. Putting so much of its wealth in a company with no track record in large acquisitions may have been a big problem for the Trust, which had already faced criticism over its decision to sell, food bankers said. Kraft Foods Corp., early on thought to be a top contender for Hershey along with Nestl�, was rejected by the Trust after offering $10.2 billion, sources said. Kraft appears not to have chased Hershey aggressively partly because the chocolate maker lacks presence outside the United States. Kraft wants to boost overseas operations. The Nestl�-Cadbury offer may have been dragged down by Cadbury, which would have gotten about 45 percent of Hershey. A Nestl� spokesman declined to comment, and Cadbury did not return calls by press time. Analysts had expected Hershey to fetch from $11.7 billion to $13.5 billion, or 13 to 15 times Ebitda. Nestl�, however, was hampered by the possibility of antitrust problems if it acquired all of Hershey, forcing it to pair with Cadbury. “The market didn’t like the [Nestl�] deal. The analysts didn’t like the deal. It’s a no-growth property,” said Simon Marshall-Lockyer of Credit Agricole Indosuez. “At an $11 billion price tag, Nestl� would have been paying 14 times pro-forma Ebitda for a company with 1.8 percent volume growth and 2.5 percent organic growth.” Still, many observers were most critical of the Trust itself for starting the whole affair. “What a disaster for Hershey,” one food banker said. Copyright (c)2002 TDD, LLC. All rights reserved.

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