Assume that you are a member of the Hershey Trust


  1. Assume that you are a member      of the Hershey Trust board. To whom (or what) do you owe your fiduciary      responsibility? How does the legacy of Milton S. Hershey affect your      thinking as a member of the board? Discuss the unique      challenges presented by the ownership structure of Hershey. Use at least      two outside references when discussing the challenges of fiduciary      responsibility, comment on stockholder vs. stakeholder representation. 
  2. Calculate      the WACC for HFC using the data provided in the exhibits; assume a Market      Risk Premium of 5.5%. Estimate the stand-alone value of HFC using the free-cash-flow      projections provided in case Exhibit 10. Calculate the implied value of      Hershey, comment on your results. Based on your valuation of HFC, do you      believe the company was fairly valued by the market before the      announcement of the sale? 
  3. Discus      the non-price considerations of the offers. To what degree do these impact      the acceptance/rejection decision. Which, if any, bid would you vote to      accept for the purchase of Hershey Foods Corporation? Is your decision      primarily based on the economics of the bids or the desire to honor the      legacy of Milton S. Hershey?
  4. Answer      both questions: 
    1. If       you reject both bids and decide not to sell HFC, what will you do to       achieve the diversification objective? 
    2. If       you decided to accept one of the bids, what (if anything) would you want       to communicate to the constituents who opposed the sale?

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