To LeRoy Zimmerman, the taste of chocolate will always mean Hershey's.
But now the head of the charitable trust that controls the Hershey Company must contemplate a risk-everything deal that would tie its fate to the much larger British chocolatier Cadbury Plc.
I was born and raised in this area -- not in Hershey, but in Harrisburg -- and to me the taste of chocolate is Hershey's, said Zimmerman, who heads the eight-member Hershey Trust.
I mean that. I've eaten in Europe all that stuff that's there. But the taste of chocolate is Hershey's to me and millions of Americans, said Zimmerman at the doorstep of his spacious home on a leafy suburban street outside Harrisburg.
Zimmerman is seen as one of the leading figures pushing for change at Hershey as it contemplates a $17 billion-plus David-eats-Goliath bid for Cadbury. It would also stare down U.S. food group Kraft, which is in the midst of a hostile takeover campaign for Cadbury.
Zimmerman, now in his mid-70s, became Pennsylvania's first elected attorney general in 1980 and now serves as senior counsel at the law firm Eckert Seamans Cherin & Mellott. Known as a power broker of central Pennsylvania.
Approached on two occasions this week, Zimmerman would not talk about the effort to orchestrate financing and political support for a deal that would require the 100-year-old Hershey to take on a company more than twice its size. [ID:nN23257449]
But it is clear that Zimmerman, whose firm keeps two large jars of Hershey kisses in its lobby, may risk taking on an ambitious deal that could change the identity of Hershey. Doing nothing could allow Kraft to create the world's largest confectioner with Cadbury, ahead of current No. 1 Mars-Wrigley.
Hershey missed an attempt to sell itself to Wrigley in 2002 as the Trust came under pressure from community groups, while a previous effort to link up with Cadbury in 2007 also fell apart. Those same tensions could be at work in a new deal, according to people familiar with the company.
If you look at what extremes the Trust would have to accept in order for Hershey to be able to acquire Cadbury, it actually violates one of the fiduciary responsibilities of the Trust where you're putting everything at risk, said a former employee, who worked with the company for 30 years.
People who know the Trust describe it as a conservative group that nevertheless must plot its strategy over long years to ensure its central mission in administering the Milton Hershey School for children in need.
As any corporation they have to make a profit. If they're not profitable it's hard to be philanthropic. They have been very generous throughout the history of their involvement in this town. I wouldn't expect that to change, said Skip Memmi, who has served on the Derry Township Board of Supervisors for more than 14 years.
Hershey is a town by its postmark and zipcode alone, a tribute to the factory that long supported its residents. But the land it sits on is incorporated as the Derry Township.
The Trust oversees a fund of $6.2 billion, with 44 percent of that invested in Hershey stock. The Hershey School says it spends about $76,000 per student per year in its residential program that provides everything from healthcare to haircuts.
Anything and everything the Trust does is from a long-term perspective, said Trust spokesman Tim Reeves. The Trust is not focused on quarterly returns. It is focused on 25-year trendlines.
Investors in the company question the wisdom of a go-it-alone Hershey bid for Cadbury that could load the company with debt and dilute the value of their shares.
I do not expect that to even happen, it would be such a financial burden on the company to go by themselves between the new debt and equity that would be involved, said Michael Warshawsky, analyst for Barrett Associates in New York, which holds about 100,000 Hershey shares.
Hershey has mulled a partnership with Italy's Ferrero to take on Cadbury, sources familiar with the situation have told Reuters. A more obvious tie-up with Swiss food group Nestle, which could more easily finance a deal and take on Cadbury's candy and gum business, has not materialized.
When asked whether he might be considering a trip to Italy any time soon, Zimmerman said:
I love Italy. My mother was Italian, he said adding that gnocchi potato dumplings are his favorite Italian food.
I love Italian food. It's great. But I don't plan to go to Italy any time soon, Zimmerman said before climbing into a tan Mercedes and driving out of his law firm's parking lot.
He drove off waving his hand in a peace sign.
(Additional reporting by Ross Kerber; Writing by Michele Gershberg, Editing by Leslie Gevirtz)