Nestle reported to have bid for Hershey Foods, Nestle declines comment

NEW YORK (AP) _ Hershey Foods Corp.'s shares rose Monday in the wake of a published report that Swiss food and beverage giant Nestle is offering about $11.5 billion for the biggest U.S. candymaker.

Monday, August 26th 2002, 12:00 am

By: News On 6

NEW YORK (AP) _ Hershey Foods Corp.'s shares rose Monday in the wake of a published report that Swiss food and beverage giant Nestle is offering about $11.5 billion for the biggest U.S. candymaker.

But Nestle, whose brands include Crunch candy bars, Taster's Choice coffee and Perrier water, declined to comment on the report, which appeared in Monday's editions of USA Today.

``Nestle does not comment on market fantasies,'' said spokesman Francois-Xavier Perroud.

The Hershey Trust Co. last month announced it had ordered Hershey Foods executives to seek bids on its controlling stake in the candymaker.

Spokesmen for the trust and the candymaker each declined to comment on Monday's newspaper report. The trust has hired investment bank Morgan Stanley to advise them in the process, while Hershey Foods has hired UBS Warburg.

USA Today, citing unidentified people familiar with the deal, said Nestle had made a preliminary bid of $82 to $85 per share for the Pennsylvania-based company, which closed Friday at $75.03 on the New York Stock Exchange.

In early trading Monday, Hershey shares were up 2.6 percent, or $1.97 a share, to $77.

The trust, which owns 77 percent of the voting shares, said it was looking to diversify its assets to protect its investment. About half of the trust's assets are invested in the candymaker's stock and board members say the trust _ which benefits the 93-year-old Milton Hershey School for disadvantaged children _ could be hurt if the company's finances falter.

Nestle, Kraft Foods and Cadbury Schweppes are seen as possible buyers.

The proposed sale of control of Hershey has run into intense resistance in Pennsylvania, where the company is based in a town that bears its name.

On Friday, Pennsylvania Attorney General Mike Fisher asked a state court to issue a restraining order against a possible sale of Hershey Foods, saying the deal could harm the community.

``We think it's time to put a halt to this sale,'' Fisher said in a statement.

Despite the criticism, Hershey Trust president and chief executive Robert C. Vowler has said the trustees' intention to explore a sale has not wavered.