The Sale That Never Happened July 25, 2002: The Wall Street Journal Reported That Hershey Was for Sale. The Stock Rose 25% in a Single Day. What Followed Was 55 Days of Community Revolt, Political Intervention, a 10-7 Board Vote, and One of the Most Dramatic Corporate Governance Battles in American History — Fought Over a Dead Man's Gift to Poor Children. THE CHOCOLATE MACHINE — Post 4

The Sale That Never Happened

July 25, 2002: The Wall Street Journal Reported That Hershey Was for Sale. The Stock Rose 25% in a Single Day. What Followed Was 55 Days of Community Revolt, Political Intervention, a 10-7 Board Vote, and One of the Most Dramatic Corporate Governance Battles in American History — Fought Over a Dead Man's Gift to Poor Children.

THE CHOCOLATE MACHINE — Post 4 | February 2026

THE CHOCOLATE MACHINE: One Man's Gift. One Deed. One Betrayed Mandate.
"In trust for a permanent institution for the residence and accommodation of poor children."

Post 1: The Gift — What Milton Hershey actually said. What the trust actually heard.
Post 2: The Surplus — 91 years of "embarrassingly large" accumulation
Post 3: The Board — Same people. Two boards. Multiple scandals.
Post 4: The Sale That Never Happened — $12.5 billion, 55 days, 10 trustees departed. ← YOU ARE HERE
Post 5: The Billion Sitting Idle — $1 billion in unspent income. The math the trust won't explain.
Post 6: The Children Who Didn't Get In — The waitlist. The admissions criteria. The human cost.
Post 7: The Maneuver — Catherine Hershey Schools: genuine mission or sophisticated optics?
Post 8: The 116-Year Question — What enforcement would require. And why it probably won't happen.

On July 25, 2002, the Wall Street Journal reported that the Hershey Trust was quietly seeking a buyer for its controlling stake in the Hershey Foods Corporation. The news broke on a Thursday. By Friday, Hershey's stock had risen 25% — over 19 million shares traded in a single day. By the following week, hundreds of people had shown up at a hastily called rally in the town Milton Hershey built. The Chocolate Workers union leader — a graduate of the Milton Hershey School himself — stood before the crowd and said: "The school taught me right from wrong and how to treat people. Let me tell you, this is wrong, and this is not how you treat people." Within days the protest had grown into something Pennsylvania had not seen before: a community of 22,000 people, united by chocolate and by the memory of a dead man's promise, marching to stop a board of trustees from selling the thing that man had given away in 1918 for the sole purpose of educating poor children. The battle lasted 55 days. The Pennsylvania Attorney General — then a Republican candidate for governor — went to the Dauphin County Orphans' Court to block the sale. A judge issued a temporary injunction. The board, overwhelmed by opposition from every direction simultaneously, met for ten hours on September 17, 2002. The final vote: 10 to 7. The sale was dead. The trustees who had voted to sell were eventually removed — ten of the seventeen departed. And the children whose trust had nearly been liquidated went back to school. This post documents exactly what happened during those 55 days. Why the board wanted to sell. What the sale would have meant for the school. Who stopped it. And what it revealed about the machine Milton Hershey built — and the people he left in charge of it.

Why the Board Wanted to Sell: The Diversification Argument

The trust's stated rationale for the sale was financial prudence, not mission abandonment. By 2002, the Milton Hershey School Trust held approximately $5.9 billion in assets — and roughly 58.6% of those assets were in Hershey Foods stock. This extreme concentration in a single company posed genuine financial risk. If Hershey Foods stumbled — as many blue-chip companies had in the post-dot-com crash — the trust's ability to fund the school could be catastrophically impaired.

The Packard Foundation, with most of its assets in Hewlett-Packard and HP spin-off Agilent, had lost nearly two-thirds of its value in 2001. The Hershey Trust board, watching that precedent unfold, wanted out of their concentrated position. Diversification was the argument. It was a legitimate one.

What the board did not do — and what its critics noted immediately — was explore whether that diversification could be achieved without selling the company entirely. A partial sale, a stock buyback, a phased diversification: all were alternatives. The board skipped the alternatives and went directly to a full sale. The children's trust, whose 1909 deed tied it to the Hershey Company's success, would have been converted into a diversified investment portfolio — removing the company Milton Hershey built from the town Milton Hershey built, permanently.

THE 2002 WRIGLEY DEAL — CONFIRMED FACTS

ANNOUNCEMENT DATE: July 25, 2002 (Wall Street Journal broke the story)
SELLER: Hershey Trust Company (controlling interest in Hershey Foods)
BUYER: William Wrigley Jr. Company (Chicago)
OFFER: $12.5 billion cash-and-stock
PRICE PER SHARE: $89 (42% above pre-announcement price)
WRIGLEY’S CONCESSIONS: New entity named “Wrigley-Hershey.” Factories
kept open. Corporate headquarters maintained in Hershey, PA.

COMPETING BID: Nestlé + Cadbury Schweppes joint bid: ~$10.5 billion
(Nestlé rejected the asking price — economics didn’t work)

HERSHEY STOCK REACTION DAY 1: Rose 25%. 19 million shares traded.
HERSHEY STOCK DAY OF WITHDRAWAL: Fell to ~$65
COST TO TRUST OF FAILED SALE: Hundreds of millions in lost value
as stock retreated from the $89 offer price back toward market

TRUST ASSETS AT TIME: $5.9 billion (~58.6% Hershey Foods stock)
ENROLLMENT AT TIME: ~1,300 students
BOARD VOTE TO STOP SALE: 10 to 7 (September 17, 2002)
55 DAYS from announcement to withdrawal
TRUSTEES DEPARTED AFTERWARD: 10 of 17

The 55 Days: What Happened

July 25: The Wall Street Journal reports the sale. Hershey's stock immediately surges. The town of Hershey — 22,000 residents, 6,200 employees — discovers that the trust built to serve poor children is selling the engine of its mission and the foundation of the local economy simultaneously.

Late July: Hundreds show up to a hastily called rally. The Chocolate Workers union — 2,700 members who had just concluded a 44-day strike earlier that year — emerge as a central organizing force. Bruce Hummel, the union leader and a 1982 Milton Hershey School graduate, becomes the voice of opposition. His quote at the rally — "The school taught me right from wrong and how to treat people. Let me tell you, this is wrong, and this is not how you treat people" — circulates nationally.

August: Pennsylvania Attorney General Mike Fisher — a Republican running for governor against Democrat Ed Rendell — moves to block the sale in the Dauphin County Orphans' Court, which has jurisdiction over charitable trusts in Pennsylvania. Fisher argues that court approval is required for any deal that removes the trust's controlling interest in the company, and that a sale could devastate the town. A judge issues a temporary injunction blocking the sale. The Trust appeals.

September 17: The Trust board meets for ten hours. The community pressure, the court injunction, the political opposition, and internal division have made the sale untenable. At the end of the ten-hour meeting, ten of the seventeen board members vote to halt the auction. The sale is dead.

🔥 SMOKING GUN #1: THE AG WHO BLOCKED A CHILDREN'S TRUST WAS RUNNING FOR GOVERNOR

MIKE FISHER:
Pennsylvania Attorney General, 1997-2005
Republican candidate for governor of Pennsylvania, 2002
The man who went to the Orphans’ Court to block the Hershey sale

HIS STATED REASON:
“Court approval was needed for any deal” removing the Trust’s
controlling interest. A sale “could devastate the town” of Hershey.

HIS POLITICAL CONTEXT:
Running for governor in a state where Hershey, PA is a major employer.
His Democratic opponent Ed Rendell also opposed the sale publicly,
calling it an attack on the community Milton Hershey built.
Both gubernatorial candidates positioned themselves against
the Trust board’s decision. Fisher used the Orphans’ Court
as the legal mechanism. Rendell used the campaign trail.

THE STRUCTURAL PROBLEM THIS REVEALS:
The sole external check on the Hershey Trust is the Pennsylvania AG.
The AG is an elected official with political incentives.
In 2002, those incentives aligned with blocking the sale.
In other circumstances, they might align differently.
The children’s trust’s oversight mechanism is a politician
whose decisions are shaped by electoral calculations.

THE SLATE COUNTERARGUMENT (September 18, 2002):
“How Pennsylvania officials screwed poor kids out of $1 billion
by stopping the sale of Hershey.” The article argued the sale
would have diversified the trust’s assets and ultimately
generated more money for the school — but political pressure
substituted for financial analysis. A legitimate argument.
Documented and included here as the serious counterargument it is.

The Community That Marched

What made the 2002 battle remarkable was not its financial scale — $12.5 billion deals are not unusual in American corporate history. What was unusual was the nature of the opposition.

This was not a shareholder revolt. The Hershey Trust owned the controlling interest. Minority shareholders had no power to stop the sale. This was not a regulatory action, initially — the AG intervened later. This was a community — the town Milton Hershey built around his factory — standing in the street to defend a dead man's promise.

The Chocolate Workers union, fresh from a 44-day strike, organized. The Milton Hershey School Alumni Association — an independent organization with no formal ties to the school — coordinated opposition. Local politicians from both parties joined. Media across Pennsylvania, nationally, and "even most of Western Europe" covered it. Congressman Tim Holden said: "Milton and Catherine Hershey would have never in their mind envisioned selling that company and breaking that commitment to Central Pennsylvania."

The community won. For one reason that had nothing to do with law or finance: the board was overwhelmed. The ten-hour meeting on September 17 ended not because a court ordered it to end, but because the ten board members who voted to stop the sale understood that the political and social cost of proceeding had become unbearable.

THE AFTERMATH: WHAT THE 2002 BATTLE PRODUCED

IMMEDIATE CONSEQUENCES:
10 of 17 trustees departed after the failed sale
Former PA Attorney General LeRoy S. Zimmerman became new board chair
Four new board members appointed who lived locally
AG investigation launched (paid for by the Alumni Association)

THE 2003 AGREEMENT (PA AG + Trust + Alumni Association):
Board overlap between Hershey Trust, Hershey Foods, and
Hershey Entertainment & Resorts eliminated — no one allowed
on more than one board simultaneously
School to file biannual reports with PA Attorney General

WHAT HAPPENED TO THE AGREEMENT:
In 2003, the AG’s office said the reporting clauses
“were tabled and would not be enforced.”
The Alumni Association sued to have provisions enforced.
In December 2006, Pennsylvania Supreme Court ruled:
Only the PA AG had standing to sue. The Alumni Association
— not created by Milton Hershey — could not enforce the deed.
“The Association’s intensity of concern is real and commendable,
but it is not a substitute for an actual interest.”

THE PERMANENT CONSEQUENCE:
The Hershey Company remains unacquirable as long as the Trust
controls 80% of voting shares and the PA AG has veto power.
Wall Street Journal reporters: Hershey is “unattainable as an
acquisition in light of its majority ownership by a trust that
for years has been reluctant to sell.”

The Question the Community Didn't Ask

The community that marched in 2002 asked exactly the right question about the sale: was it faithful to Milton Hershey's intent? The answer they gave — no, he would never have sold the company — was probably correct. Hershey built his company and his town as an integrated system. Selling one would have destroyed the other.

But the community did not ask the harder question — the one this series has been building toward across four posts.

If keeping the Hershey Company is how the trust honors Milton Hershey's memory, what does keeping the surplus honor?

The same community that marched to stop the board from selling Hershey's chocolate did not march to demand that the trust spend its billion dollars in unspent income on more poor children. The same Alumni Association that sued to enforce the 2003 agreement — and lost — did not file suit demanding enforcement of the deed's enrollment mandate. The same Pennsylvania Attorney General who went to Orphans' Court to block the sale has not, in the years since, taken the trust to court for failing to admit "as many qualifying children as income permits."

The machine that keeps the Hershey Company in Pennsylvania has passionate defenders. The children who should be in the school but aren't have no organized defenders with legal standing.

The Pennsylvania Supreme Court said it plainly in 2006: only the AG has standing to enforce the deed. The AG is an elected official. Elected officials respond to organized political pressure. The children the deed was written to serve have no organization, no legal standing, and no votes.

🔥 SMOKING GUN #2: THE MONDELEZ BID — AND THE SECOND TIME THE MACHINE PROTECTED ITSELF

2016: MONDELEZ INTERNATIONAL offers $23 billion for Hershey.
Mondelez: maker of Oreo, Cadbury, Honey Maid. $30 billion annual revenue.
Offer: $23 billion — $107/share, 30% premium to market price.
Hershey’s board: unanimously rejected.
Trust: declined to comment.

WHY THE TIMING MATTERED:
The PA AG’s office was simultaneously investigating the Hershey Trust
for spending and board tenure violations (pre-2016 second settlement).
The AG herself — Kathleen Kane — was under criminal indictment
(wire fraud, perjury, obstruction) for leaking grand jury information.
The scandal was dubbed ‘Porngate’ by local media.

WHAT A HERSHEY DEAL HISTORIAN NOTED:
Joel Glenn Brenner (author, “The Emperors of Chocolate”):
“This time, what makes it different is these investigations,
the chaos at the attorney general’s office, and the fact that
there has been a turnover at the trust.”

THE TRUST’S OFFICIAL RESPONSE:
“We expect to appropriately resolve outstanding concerns the
Attorney General’s office has concerning the interpretation
of the 1909 deed of Milton S. Hershey.”

THE RESULT:
No sale. Hershey rejected Mondelez.
The Trust retained its 80% voting control.
The children’s trust remains structurally unacquirable —
protected not by the interests of the children it serves
but by the interests of a Pennsylvania community
that depends on the Hershey Company for its economy.

✓ THE FULL ACCOUNT: THE CASE FOR WHAT THE COMMUNITY DID IN 2002

The diversification argument had real risks. The Packard Foundation’s collapse proved that concentrated positions in single stocks can destroy charitable endowments. The Trust board was not wrong that concentration in Hershey Foods stock represented genuine financial risk. The question was the solution — and total sale was the most extreme possible response to that risk.

The community’s defense of the Hershey Company may have served the children. By keeping the Hershey Company Pennsylvania-headquartered and in trust control, the community preserved the long-term earnings engine that has grown the endowment to $23 billion. If the 2002 sale had produced $12.5 billion and the Trust had diversified into a standard portfolio, the endowment today might be smaller — not larger. The community’s instinct to preserve the original structure may, paradoxically, have served the children’s long-term interests even if it was argued in terms of community self-preservation.

Wrigley’s promises were not binding. The commitment to keep factories open and maintain the Hershey name were goodwill gestures, not contractual obligations enforceable against Wrigley’s successors. Mars (which later acquired Wrigley) would have had no legal obligation to honor any of them. The community’s skepticism about those promises was rational.

Slate’s counterargument deserves acknowledgment. The argument that the AG’s politically motivated intervention cost the children’s trust a billion dollars — by blocking a sale that would have diversified the portfolio at a premium price — is serious. The sale at $89/share was replaced by Hershey stock retreating to $65 the same day. The children’s trust absorbed a paper loss of hundreds of millions in a single afternoon of political theater. Whether the long-term outcome justified that short-term loss is genuinely uncertain.

What the Sale Attempt Revealed

The 2002 battle clarified something that seven posts of this series have been approaching: the Hershey Trust is not primarily accountable to the children it was created to serve. It is accountable to the Pennsylvania Attorney General, who is accountable to Pennsylvania voters, who care about the Hershey Company, the town of Hershey, and the 6,200 people who work there.

The children the 1909 deed names as sole beneficiaries have no formal standing. They cannot sue. They cannot vote. They cannot march on Chocolate Avenue. When their interests conflict with the interests of the community around the Trust, the community has organized defenders with legal standing. The children do not.

This is the structural fact that explains everything else in this series. The surplus accumulates because there is no organized, legally empowered advocate demanding the Trust spend more of it on children. The enrollment stays at 2,100 because there is no court-enforceable mandate to admit more. The board pays itself from the children's trust because there is no independent body with standing to stop it — only the AG, whose priorities are electoral.

In Post 5, we put a number on what that structural gap has cost. $1 billion in unspent income sitting idle inside a $23 billion trust — and the math of what that money could have done for the children the deed was written to serve.

METHODOLOGY: HUMAN-AI COLLABORATION

PRIMARY SOURCES FOR THIS POST:
Philanthropy Roundtable, “Milton Hershey’s Trust”: Confirmed spring 2002 board decision, CEO Richard Lenny’s role crafting the Wrigley deal, Wall Street Journal July 25 report, community protest, candidate opposition (Rendell and Fisher). Wikipedia, “The Hershey Company”: Confirmed 7 trustees voted to sell September 17, 2002 for $12.5B; 10 of 17 trustees forced to resign; AG and Orphans’ Court role; stock rose 25%; 19 million shares traded. Philanthropy News Digest (September 2002): Confirmed Trust halted sale after “ten-hour meeting in which ten of the Trust’s seventeen board members voted to stop the auction,” $5.9B trust assets, Rick Kelly quote, Nestlé/Cadbury $10.5B competing bid. VOA News (September 2002): Confirmed hundreds at rally, Bruce Hummel quote (“school taught me right from wrong”), Congressman Holden quote, vote 10 to 7, community relief. Capital Research Center: Confirmed 2003 agreement provisions (board overlap elimination, biannual reporting), 2006 PA Supreme Court ruling (only AG has standing), agreement clauses “tabled and would not be enforced.” Slate (September 18, 2002): “How Pennsylvania officials screwed poor kids out of $1 billion” — confirmed counterargument, $89 → $65 stock price drop, AG Mike Fisher’s gubernatorial candidacy, Packard Foundation comparison. Morning Call (October 2003): Confirmed 22,000 residents, 6,400 Hershey employees, community impact. Yahoo Finance / Reuters (2016): Confirmed Mondelez $23 billion bid, Trust’s 81% voting control, Joel Glenn Brenner quote, Hershey unanimous rejection, ‘Porngate’ context, Trust statement on “1909 deed.”

WHAT COMES NEXT:
Post 5 documents the $1 billion in unspent accumulated income — the number that directly answers the question: what could “as many as possible” look like, and why hasn’t the Trust moved toward it?