US candy maker Hershey Foods may soon announce plans to repurchase stock using the ‘Dutch auction’ process.
Salomon Smith Barney analyst Jaine Mehring is quoted by the Harrisburg Patriot as saying: “We think there is a possibility that Hershey might announce a meaningful share buyback, perhaps via a Dutch auction, by the time it reports earnings.” The company declined to comment, but is known to have spare cash which could logically be used to buy back stock.
A Dutch auction would see Hershey try to buy stock back from investors by offering them a premium over the current stock price. Such an auction would give the charitable trust that owns a controlling stake in Hershey Foods the opportunity to reduce its stake in the candy company.
The trust recently tried to sell its stake in Hershey Foods, but changed its plans after meeting considerable opposition from politicians and the community alike. However, it is still seeking to diversify its assets, more than half of which is composed of Hershey Foods stock.