4.5 million shares sounds like a lot until you realize the trust will still have 60.6 million shares of the Hershey Company. According to Penn Live 3 million of the shares are being purchased by Morgan Stanley and 1.5 million shares are being bought back by The Hershey Company. The purchase price for the company buy-back is $106 per share. We don’t know what the price for Morgan Stanley’s purchase is at this point.
Mondelez’s bid for the company in the summer of 2016 was $115 per share.
The total value of the trust, which is for the sole benefit of the Milton Hershey School, is $13.8 billion (yes that’s a “B”) so the total sale price for the 4.5 million shares of $475 million represents only 3.4% of the trust’s portfolio.
I”ll grant you that’s a bit of diversification – but its a drop in the bucket.
The school trust will still have 60.6 million shares of The Hershey Company B stock and 8 million shares of common stock. At a price of $106, that’s a total of $7.27 billion which represents a concentration in the trust portfolio of a whopping 53%. That’s a lot of eggs for one basket.