MDLZ5.91% Mondelez International Inc.MDLZ5.91% made a roughly $ 23 billion bid for Hershey Co.HSY16.83% in an effort to create the world's largest candy maker at a time when both companies' sales are under pressure.
Mondelez, which makes Oreo cookies and Cadbury chocolate bars, recently sent a letter to Hershey proposing a tie-up at $ 107 a share, half in cash and half in stock. Hershey's board unanimously rejected the bid Thursday and said it "provided no basis for further discussion."
Still, Hershey shares surged 17% to $ 113.49 on news of the offer—first reported by The Wall Street Journal—remaining elevated even after the company rejected the bid, in an indication investors believe Mondelez won't be discouraged. Mondelez shares gained 6% to $ 45.51, giving the snack giant a market value of more than $ 70 billion.
A takeover of Hershey, known for its namesake Kisses and chocolate bars, would face obstacles. Any deal would require the approval of the Hershey Trust, which holds 8.4% of its common stock and 81% of its voting power and has opposed a sale in the past.
A spokesman for the trust, whose board includes three Hershey directors, declined to comment.
In preparing its bid, which was disclosed in a private letter last week, Mondelez took steps to win over the trust. The Deerfield, Ill., company pledged to protect jobs, locate the merged company's global chocolate headquarters in Hershey, Pa., and rename it Hershey, said a person familiar with the matter.
A Mondelez-Hershey merger would bring together the candy industry's second- and fifth-largest players by revenue, according to research firm Euromonitor. Mondelez is second only to Mars Inc.
The union would be expected to face little resistance from antitrust authorities, as Mondelez doesn't have its own presence in the U.S. chocolate market. Hershey, which makes the Cadbury chocolate sold in the U.S. under a licensing deal with Mondelez, has a limited presence outside the U.S.
Among the potential hurdles for Mondelez: its bid could flush out other parties who might covet Hershey. Nestlé SA is one possibility. The Swiss food giant, which has a big chocolate business, licenses its KitKat brand to Hershey in the U.S. But Nestlé could face bigger antitrust issues in the U.S. if it were to try to buy Hershey.
Nestlé has the right to reclaim control of KitKat at no cost if someone else buys Hershey. That could reduce Hershey's value to Mondelez by $ 3 billion, according to a person familiar with the matter.
The Hershey Trust, established by the 122-year-old company's late founder, Milton Hershey, is the biggest potential roadblock. The trust's primary beneficiary is a school for underprivileged children in Hershey's hometown.
Mr. Hershey was considered as much a philanthropist as an entrepreneur. As he built the chocolate company, he raised a town as well, erecting a bank, a department store, churches, golf courses, a zoo and a trolley system. Then, in 1909, he and his wife, Catherine, founded a school for orphan boys, now called the Milton Hershey School. Today the lavishly appointed private school serves disadvantaged children of both sexes.
Over a decade ago, chewing-gum maker Wm. Wrigley Jr. Co., now a unit of the privately held Mars, tried to buy Hershey, but resistance from the trust scuttled the deal at the last minute. A joint bid from Nestlé and what was then Cadbury Schweppes was also rejected.
The Pennsylvania attorney general is investigating the trust's board for alleged overpayment of directors and conflicts of interest, and the trust has said it is working with the attorney general's office on the probe. This year, several of the directors have resigned, which could change the board's attitude toward a possible sale. Indeed, a person familiar with the matter said the trust, which now includes some directors with Wall Street backgrounds, may now be more open to a deal.
It also isn't clear how any any deal would be received in the town of Hershey, where streetlights along Chocolate Avenue are topped with giant Hershey kisses.
Hershey had sales of $ 1.8 billion in the first quarter, a 5.6% decline from the year-earlier period, in part because of adverse currency moves. In 2015, the company had sales of $ 7.4 billion and earnings of $ 513 million. The company has about 80 brands, and has recently moved to court more health-conscious consumers.
Mondelez, based in Deerfield, Ill., had sales of $ 29.6 billion in 2015, down 14% from a year earlier, also partly due to currency swings. In the first quarter, its revenue fell nearly 17% to $ 6.5 billion, amid pressure on its coffee business.
Mondelez has a complicated deal-making history. The company is the product of a 2012 separation from Kraft Foods Inc., which had been under pressure from Trian Fund Management LP and other activist investors. That came only two years after Kraft had acquired the U.K. chocolate company Cadbury PLC for $ 19 billion, and the chocolate assets went with Mondelez in the separation.
When Kraft bought Cadbury in 2010, it promised it would protect jobs in the U.K. and keep open a factory there. Within months, it announced it would close that plant after saying it had learned new information about its profitability. The U.K.'s Takeover Panel criticized the company and its bankers for the reversal.
Last year, William Ackman's Pershing Square Capital Management LP disclosed a 7.5% stake, worth $ 5.5 billion at the time, betting the company would become a target, rather than an acquirer, in a coming wave of consolidation in the snack industry. Mr. Ackman recently trimmed the Mondelez stake to 5.6% including options.
Trian also has a 3% Mondelez stake and the firm's co-founder, Nelson Peltz, is on the snack company's board.
Trian in 2013 unveiled stakes in PepsiCo Inc.PEP2.73% and Mondelez and began pushing for a merger of the two to be followed by a spinout of Pepsi's beverage business. Pepsi rejected the idea, and Trian dropped its call for a merger when Mr. Peltz joined Mondelez's board in 2014.
—David Benoit and Annie Gasparro contributed to this article.
Write to Liz Hoffman at liz.hoffman@wsj.com, Dana Mattioli at dana.mattioli@wsj.com, Dana Cimilluca at dana.cimilluca@wsj.com and David Benoit at david.benoit@wsj.com
One week ago, against the advice of its political establishment, Britain narrowly voted to leave the European Union. Within a few days, that establishment was in the process of a full-scale implosion: the country is effectively without government or opposition, shorn of leadership, bereft of direction. As the pound crashed and markets tanked, the chancellor of the exchequer went missing for three days while Boris Johnson, the most prominent member of the Leave campaign, spent the weekend not sketching out a plan for the nation's future, but playing cricket and writing his column for the Telegraph. Having asserted its right to sovereignty, the country can now find nobody to actually run it.
Meanwhile, the very prize won in the referendum – to leave the EU – remains unclaimed. Article 50 of the Lisbon Treaty sets out the process for leaving the EU. Once invoked, a country has two years to negotiate the terms of the divorce. But no one will touch it. Prime Minister David Cameron, who led the losing campaign to remain in the EU, announced his resignation within hours of the result, insisting that his successor should be the one to pull the trigger. Johnson, who is favoured to replace Cameron, protests that there is "no need for haste". During the campaign, our departure from the EU had many proud and pushy parents. In victory it is an orphan.
What is article 50?
Cutting the figure not so much of a failed state as a state intent on failure, the nation's credit rating was downgraded, its currency devalued and its stock market depleted. On polling day the Leave campaign reminded us that we were the fifth-largest economy in the world and could look after ourselves. By the following afternoon our currency was sufficiently decimated that we had fallen to sixth, behind France.
In the ensuing panic, some politicians argued that we could simply ignore the referendum result: David Lammy, the Labour MP for Tottenham, suggested it was "advisory and non-binding", and urged parliament to call another referendum, in order to avert economic catastrophe. A huge number of people petitioned the government to do the same – while the eminent barrister Geoffrey Robertson insisted a second referendum was not necessary to overturn the result: parliament could just vote it down. "Our democracy does not allow, much less require, decision-making by referendum," he wrote. "Democracy has never meant the tyranny of the simple majority, much less the tyranny of the mob."
It was argued that we could not leave the final word on such momentous decisions to ordinary voters: they didn't know what they really wanted, or they had been tricked into wanting something that would hurt them, or they were too ignorant to make informed choices, or maybe they quite simply wanted the wrong thing. A significant portion of the country was in the mood for one big do-over – a mood enhanced by considerable class contempt and the unmistakable urge to cancel the universal franchise for "stupid people" incapable of making the right decisions.
Everything had changed – we had decided to end a more than 40-year relationship with our continental partners and the consequences were far-reaching. In Scotland independence was once again in play; in Westminster, resignations from the shadow cabinet came by the hour; in the City, billions were wiped off by the day. Indeed, one of the few things that didn't budge was the very issue that had prompted it all: our membership of the European Union. The only thing we know for sure is that we don't know how and when we will actually leave it. We are simultaneously in freefall and at a standstill, in a moment of intense and collective disorientation. We don't know what is happening and it is happening very fast.
But the only thing worse than the result and its consequences is the poisonous atmosphere that made it possible. The standard of our political discourse has fallen more precipitously than the pound and cannot be revived as easily. This did not happen overnight, and the sorry conduct of the referendum campaign was only the latest indication of the decrepit state of our politics: dominated by shameless appeals to fear, as though hope were a currency barely worth trading in, the British public had no such thing as a better nature, and a brighter future held no appeal. Xenophobia – no longer closeted, parsed or packaged, but naked, bold and brazen – was given free rein. A week before the referendum, an MP was murdered in the street. When the man accused of killing her was asked his name in court he said: "Death to traitors, freedom for Britain."
On the day after the referendum, many Britons woke up with the feeling – some for better, some for worse – that they were suddenly living in a different country. But it is not a different country: what brought us here has been brewing for a very long time.
Boris Johnson the day after the EU referendum vote, which his leave campaign won. Photograph: Reuters
The thing people often forget about Aesop's fable of the boy who cried wolf is that in the end, there really was a wolf. Indeed, the story wouldn't have its moral if the wolf didn't show up and ravage the shepherd boy's flock. Lying has consequences that last far longer than individual acts of deception: it ruins the liar's ability to convince people when it really matters.
The source of the mistrust between the establishment and the country isn't difficult to fathom. Next week the Chilcot inquiry will publish its findings into the Iraq war. After Iraq, we faced an economic crisis that few experts saw coming until it was too late. Then followed austerity; now the experts said this was precisely the wrong response to the crisis, but it happened anyway.
When leaders choose the facts that suit them, ignore the facts that don't and, in the absence of suitable facts, simply make things up, people don't stop believing in facts – they stop believing in leaders. They do so not because they are over-emotional, under-educated, bigoted or hard-headed, but because trust has been eroded to such a point that the message has been so tainted by the messenger as to render it worthless.
This was the wolf we were warned about. It is now mauling our political culture and savaging our economic wellbeing. We were warned of it by leaders in whom we had no confidence. So we all chose the facts we liked, and we all suffered. The wolf does not discriminate. As Aesop reminds us at the end of the fable: "Nobody believes a liar, even when he's telling the truth."
When leaders choose only the facts that suit them, people don't stop believing in facts – they stop believing in leaders
This distrust is both mutual and longstanding, prompting two clear trends in British electoral politics. The first is a slump in turnout. In 1950, 84% of Britons voted in the general election; by last year it was 66%. The decline has not been uniform, but the general trajectory has been consistent. Between 1945 and 1997 turnout never went below 70%; since 2001 it has never reached 70%.
The second is a fracturing in political allegiance. For most of the postwar period, British electoral politics was effectively a duopoly. In 1951, 97% of votes were cast either for Conservatives or Labour. By last year, the combined total was 67%. Fewer people want to vote, and fewer voters want the two major parties. With a first-past-the-post system, designed to ensure that one of those parties wins a majority, our governments now preside with diminished legitimacy over a splintered political landscape. Cameron's Tories were elected last year with only 24% of the eligible vote. In 1950, Winston Churchill was defeated even though 38% of eligible voters backed him.
These trends had similar consequences for the tactics of the two major parties. Under Cameron, the Conservatives, who had lost two prime ministers to the question of Europe, were able to abandon the most nativist elements of their base in order to pursue votes in the centre, rebranding themselves as the sensible party of British modernity. No longer "the nasty party", the Conservative leadership embraced gay marriage, aggressively sought non-white spokespeople, and took a more moderate line on Europe than its members felt comfortable with.
Labour could also reposition itself, in the knowledge that it could keep winning elections even as it kept losing voters. Those who voted for Brexit tended to be English, white, poor, less educated and old. With the exception of the elderly, these have traditionally been Labour's base. But the party has been out of touch with them for some time. The New Labour project made the party's appeal both broader and shallower: there was a sharp pivot rightward, made with the conscious calculation that its core supporters had nowhere else to go.
The coalition of metropolitan liberals, city-dwellers, ethnic minorities, union members, working-class northerners and most of Scotland slowly began to fray. Poverty went down and inequality went up. Appeals to class politics gave way to more aspirational messaging. While covering the 2001 election, I recall the indifference that met Tony Blair on the campaign trail. He would appear in front of small, curious crowds, and then wave over their heads into the middle distance for the cameras. They voted for him – the alternative was William Hague running around in front of a pound sign – but they were not remotely engaged or inspired by him or his party.
The leave campaign did not invent racism. The deployment of bigotry to suit electoral ends has a longstanding tradition
In areas that Labour once had a stranglehold on, its vote slumped. Blair took his third victory in 2005 with only 9.5 million votes – fewer than Neil Kinnock managed when he lost to Margaret Thatcher in 1987. As long as the economy was doing well, a significant proportion of voters just stayed home – and there was no way to tell how soft the remaining support was until it was tested. Now those tests have come: in Scotland from the SNP, and in England and Wales from Ukip.
It may seem a minor matter in the wake of this referendum to say that our political parties are failing in their historic mission, but we would not have arrived here were they not doing so. The party set up by trade unions to represent the interests of workers in parliament no longer commands the allegiance of those people. True, almost two-thirds of Labour voters did vote remain – but an overwhelming number of the working-class, the poor, and the left-behind put their faith in leave. Meanwhile, the party of capital and nation has presided over a painful blow to the City and the Union. Neither party is fit for purpose.
The leave campaign did not invent racism. The deployment of bigotry to suit electoral ends has a longstanding tradition in this country, which is often denounced even by those who have done exactly that. Neglect, both benign and malign, and indulgence, both covert and overt, left those prejudices open for opportunists to exploit for their own ends. This was one such opportunity.
Liberal commentators have come to automatically identify poorer Britons with an ingrained loathing of foreigners, but in fact the British working class has a distinguished history of anti-racism: from the Lancashire mill workers boycotting cotton picked by slaves in the American Confederacy by to the battle against fascism at Cable Street, and the campaigns of the Anti-Nazi League and the Anti-Apartheid Movement. In the last year, thousands of ordinary people have made their way to Calais with supplies for refugees.
Like all classes in Britain, however, it also has a bleak history of racism, which can make the journey from the street to the ballot box. Sometimes this has taken the form of open calls for white racial solidarity against non-whites. Sometimes it has taken organised forms, in the shape of Oswald Mosley's New Party, the National Front, or the British National Party. And at other times, it has been neatly folded into the fabric of mainstream politics.
The National Front rose to prominence in the 1970s, but saw its advance blunted by Margaret Thatcher, who promised to be tough on immigration, and expressed sympathy for people who "are really rather afraid that this country might be rather swamped by people with a different culture". Then came the BNP, which triggered a brief period of intense scrutiny and concern when it won a council seat in the Isle of Dogs, east London, in 1993. By 2003, the party had 17 councillors, and by 2008, more than 50 around the country. By increments, the BNP became a constant, if contested, fact of British municipal life. In the 2009 European elections, the party's leader, Nick Griffin, won one of two BNP seats in the European parliament. That same year, Griffin found himself on BBC1's Question Time. The rise of Ukip would later suck up all the oxygen on the far right, and Griffin would disappear, only to be replaced by Nigel Farage. More blokey and garrulous, less abrasive and boorish, Farage narrowed the focus to Europe and, by doing so, widened the far right's appeal.
The divisions such movements sow have always posed a particular challenge for Labour, since the party's core base of support is vulnerable to social and economic change to start with. That is why nativist parties always play best during times of recession, when resources are scarce and people are looking for someone to blame. In a letter from 1870 that, with a few words changed, could have been written any time in the past few years, Karl Marx vividly described this dynamic: "Every industrial and commercial centre in England possesses a working class divided into two hostile camps, English proletarians and Irish proletarians. The ordinary English worker hates the Irish worker as a competitor who lowers his standard of life … This antagonism is artificially kept alive and intensified by the press, the pulpit, the comic papers, in short by all the means at the disposal of the ruling classes."
The Tories have consciously fanned these flames. In 2005, when the Tory leader Michael Howard ran his whole general election campaign on immigration, with the insidious slogan "Are you thinking what we're thinking?", the party's MP in Castle Point, on the Essex coast, asked in one leaflet: "What bit of 'send them back' don't you understand Mr Blair?" During that election, I drove from the least diverse constituency in the country – St Ives in Cornwall – to the most, which was in east London. In Cornwall, the Liberal Democrat MP, Andrew George, said the racism he was hearing was a particular worry. "It's the one resonance issue that's favouring the Tories," he told me. "On the doorstep people aren't saying: 'I'm voting Conservative because of their tax spending plans.' People have been saying, 'We only came down here to get away from the blacks,' and there was no self-consciousness about saying it out loud. I'm very disturbed about it. Maybe they're not playing the race card. But they're playing the immigration card and that's right next to the race card in the deck."
Theresa May gives a speech in 2005 during the general election campaign, with the Conservative party's slogan to the fore. Photograph: Graeme Robertson for the Guardian
This week, David Cameron condemned "despicable" xenophobic attacks in the wake of the EU referendum. But just last month he was galvanising the Tory faithful in London with claims that the Labour mayoral candidate, Sadiq Khan, was in cahoots with an imam who, Cameron alleged, supported Isis. That claim was so utterly false that if the prime minister did not enjoy parliamentary privilege against charges of defamation, he would have had to pay damages to the imam, as the defence secretary Michael Fallon was forced to do when he repeated the remarks outside the House of Commons.
With a few notable exceptions, Labour's response has been less crass but no less calculated. Labour tends to condemn outright bigotry before clothing it in the cosy blanket of understanding and concern for the bigot. It protests and then it panders. It routinely points out that racism is bad, but is rarely brave enough to make the case for why anti-racism is good. This leads to the worst of all worlds. Racism and xenophobia are condemned but never challenged, which leaves those who hold such views feeling silenced and ignored, but never engaged. This, in turn, leaves them prey to hucksters like Farage, who can claim to speak for them.
After his party lost a seat in Smethwick, West Midlands, in 1964 to a notoriously racist campaign, the Labour minister Richard Crossman concluded that: "It has been quite clear that immigration can be the greatest potential vote-loser for the Labour party." This view was shared by Tony Blair's government. Blair chose the white cliffs of Dover for a 2005 election speech on refugees and immigration – when it was time for the photo call, there wasn't a black face to be seen. In 2006, as the Iraq war descended into chaos, home secretary John Reid turned his focus on the enemy within – intolerant Muslims. "This is Britain," Reid told the party conference. "We will go where we please, we will discuss what we like, and we will never be browbeaten by bullies. That's what it means to be British." A few years later Jack Straw lectured Muslim women on what to wear when they came to his surgery.
The effect was not to blunt the rise of organised racism but to embolden it, making certain views acceptable and respectable. It was embedded in our political language and institutions and then left to fester.
We have yet to see a general election in which race and immigration are the defining issues. If that were the case, one would expect to see Ukip do far better that it has previously. At an election, people vote for parties that they believe, on balance, identify with their concerns on a range of issues. But this was not a general election. It was a referendum on membership in an unloved institution that was the source of mass migration on a scale that the government had not anticipated, and that most Britons were not prepared for.
Although much has been made, since the referendum, of results showing that areas with little migration were most opposed to it, we should not underestimate the jolt that accompanied the effects of free movement within a newly enlarged European Union. I left Britain for America in 2003, before it opened its borders to the east. After a few trips back in 2005, I simply stopped assuming that white people in London spoke English any more. The transformative potential was clear even then: states may import workers, but it is people who actually come. My parents came from Barbados in the 1960s, planning to stay for a few years, make some money and head back "home". Instead they had kids and stayed. I saw no reason why many of these new immigrants wouldn't do the same – and I wondered how the language we used to talk about race and migration would change now that there were so many new arrivals who were white but not British.
Tony Blair in Dover where he gave a speech on immigration in 2005. Photograph: Dan Chung for the Guardian
In the past, pollsters and politicians had elided the two issues – considering "race/immigration" as a single area of concern. That was never true or accurate, but the new situation made it even more clear that we needed to have a sophisticated conversation about migration and race. Not the conversation that politicians always claim we are avoiding, about the dreadful impact of migration – but a conversation about our needs as an ageing nation, about our economic and foreign policies, about how immigrants contribute far more in taxes than they take in benefits, and about the fact that there are considerably fewer of them than British people think. (For instance, in a recent Ipsos Mori poll, on average, respondents thought that EU immigrants accounted for 15% of the population – the true figure is about 5%.) But that is not all: we needed to have a conversation about the resources that communities require to accommodate an influx of new arrivals – school places, hospital beds, housing – and about who was responsible for cutting the budgets that used to provide these things.
But that is not the conversation we are having. It is not even the conversation we have never had. It is the conversation our leaders have desperately and wilfully avoided. For decades, the issue of race (the colour of people) and immigration (the movement of people) have been neatly interwoven, as though they are one and the same thing – as though "British" people are not also black and black people are not British.
It has been profitable for politicians – and not only Nigel Farage – to sow confusion about the difference between migration from the EU and elsewhere, or the distinction between economic migrants and asylum seekers. The argument that this was a vote about "economic" issues – since the hated European migrants were not brown or black – is belied by the deliberate commingling of every type of foreigner. It was not an accident that the "Breaking Point" poster, revealed by Farage on the morning of Jo Cox's murder, showed Syrian refugees coming into Slovenia, an image with almost no relevance to the issue on the ballot.Xenophobia and racism are easily blended, and they become an especially potent toxin among a population that no longer trusts its own leaders.
To describe this as a working-class revolt against the elites is to give the elites more credit than they are due. With both sides run by Old Etonians and former Bullingdon boys, the elites were going to win no matter who you voted for.
It would be more accurate to say that the results reflected an ambivalence toward the elites on both sides. When leaders who you believe don't care about you – and can do nothing for you – tell you what is in your best interest, it's reasonable to ignore them. People who were told they would lose out in the recession to come felt they didn't have much to lose; people who were told that belonging to the EU gave them certain rights and advantages did not see they had any value. It would be as much of a mistake to assume these people consciously voted for Faragism as to think they could never be tempted by it.
'I cried': London's Europeans react to Brexit — video
On this point, those who voted remain should, at the very least, concede that had we voted to stay in, the country would not be having this conversation. If remain had won, we would already have returned to pretending that everything was carrying on just fine. Those people who have been forgotten would have stayed forgotten; those communities that have been abandoned would have stayed invisible to all but those who live in them. To insist that they will now suffer most ignores the fact that unless something had changed, they were going to suffer anyway. Those on the remain side who felt they didn't recognise their own country when they woke up on Friday morning must spare a thought for the pensioner in Redcar or Wolverhampton who has been waking up every morning for the last 30 years, watching factories close and businesses move while the council cuts back services and foreigners arrive, wondering where their world has gone to.
Many of those who voted leave will undoubtedly feel that they have had their say after years of being ignored. But they are beginning to discover that they have been lied to. Even when it feels that there is nothing left to lose, it turns out that things can always get worse. And even when it feels like nobody tells you the truth, it turns out that some factions of the elite can and will do more damage to your life than others.
One of the defining illusions of the populist rightwing agenda is that it possesses a unique ability to rally the poor on the basis of race and nation – but even here, it cannot deliver on its own terms. The leaders of the leave campaign have been in a furious retreat since their moment of triumph: they have walked back promises to control immigration, to quit the single market, and to "give our NHS the £350m the EU takes every week". Leaving the EU does not diminish the power of the multinationals that moved manufacturing jobs overseas, or the financiers whose recklessness led to the closure of libraries and the shrinking of disability benefits. We have not opted out of global capitalism. Something will now be done about the free movement of labour – but capital will still have the run of the place.
The anger that has been unleashed is not being directed at the elites. Instead it is flying every which way to alarming effect: black people are being abused in the street; a Polish community centre has been defaced; eastern European children are being taunted in schools. Liberals are blaming the poor, Cameron is blaming Boris, the Daily Express is blaming the EU ("Brexit Vote is EU's Fault: Ignoring Britain was Big Mistake"), business is blaming Cameron and Boris, Scotland is blaming England, London is blaming the rest of England, children are blaming their parents, and the EU is blaming all of us.
The Vote Leave battle bus in Portsmouth. Leaders of the victorious campaign have already stepped back from the pledge to spend £350 million on the NHS. Photograph: Matt Cardy/Getty Images
On 31 December 1999, as American television viewers watched around-the-clock coverage of the arriving millennium, one time zone at a time, the ABC newsreader Peter Jennings offered an appraisal of recent British history as he watched the fireworks light up the sky over the Thames. "This country has been through so much," he said. "In 1900, when Queen Victoria was on the throne, Britain ruled over one-fifth of the world's population. But for all this fantastic show, Britain's possessions have dwindled to … Well, Hong Kong has gone now and, well … The Falklands are still British."
Ever since the Suez crisis, Britain has struggled with its place in the modern world. Nostalgic about its former glory, anxious about its diminished state, forgetful about its former crimes, bumptious about its future role, it has lived on its reputation as an elderly aristocrat might live on his trust fund – frugally and pompously, with a great sense of entitlement and precious little self-awareness.
Related: Trident: the British question | Ian Jack
Once great, now not so great, it has struggled to find a status in its post-colonial iteration that fits its size and budget. We punch above our weight culturally, have significant clout economically and suffer painful delusions of grandeur militarily (let's not talk about football). Where foreign policy and defence are concerned, Britain's desire to be taken very seriously is the chief obstacle to it being taken more seriously. One of the central reasons for keeping the Trident weapons system, we are told, is so that we can keep "a seat at the table". Our military involvement in Syria was intended not to be decisive but to send a message. And then there was Iraq. In most cases Britain craved a role for itself as the sole reliable conduit between America and Europe. Peripheral to the action; central to the process.
The fact that our ability to fulfil that function for the US has been severely diminished – President Barack Obama asked us to remain and we wouldn't even listen to him – may be one of the few good things to come out of this whole mess. Indeed, our lesser status has already become clear from the attempts that have been made to negotiate ourselves out of the situation we just voted ourselves into.
While we were in the EU, Europe was prepared to try and make it work, even though we were a severe irritant. Now that we've voted out, they just want us gone. The German chancellor, Angela Merkel, could not have been clearer. She's not interested in Britain holding another referendum, and is not inclined to give it any special favours. There would be no "cherry-picking. There must be and there will be a palpable difference between those countries who want to be members of the European family and those who don't." In other words, we will now be treated like any other country – which is precisely what we assumed we weren't.
This melancholic grasping for our former glory has not served our politics well and is a key to understanding how this happened. In the absence of any substantive argument about how "taking back control" might look in the 21st century, we got men like Farage and Johnson waving flags and pounding their chests.
The route map out of this sorry situation will not be achieved by reversing the results of an election (even if that were desirable) or renegotiating a deal with the EU (even if that were possible). It will come through some broader reimagining of Britain that pays more attention to work, fairness, community and equality, than to flag, nation, anthem and culture. For the last 15 years, governments and the press have stoked fears about whether British culture could withstand the integration of Muslims – of whom 70% voted for remain – when they should have been worried about how to integrate the white working class into the British economy.
Brexit didn't create these problems. It exposed them and will certainly make them worse. The decision as to whether we live in or out of the EU has been made. The choice before us now is whether we are finally ready to confront the issues that we have blissfully denied and engage with the communities we have carelessly ignored.
Main Photograph: Rex/Shutterstock
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• This article was amended on 30 June 2016. An earlier version referred to Slovakia where Slovenia was meant.
A Hershey’s chocolate bar is shown in this photo illustration.
Reuters/Mike Blake
Hershey Co (HSY.N) said on Thursday it had rejected a $ 23 billion preliminary offer by Mondelez International Inc (MDLZ.O) that would seek to expand the latter’s limited U.S. footprint and create the world’s largest confectioner.
The snub underscores the challenges Mondelez faces in wooing Hershey’s controlling shareholder, the Hershey Trust, a $ 12 billion charity created by the eponymous company’s founder a century ago.
The trust has been roiled by allegations of mishandling one of the country’s richest endowments. Hershey shares traded above Mondelez’s offer of $ 107 per share in cash and stock, indicating investors expected a new offer.
A merger of two of the world’s top five candy makers would bring Hershey’s strong U.S. business to Mondelez’s global footprint.
Earlier, a source said that Mondelez had sought to provide assurances to Hershey that it would keep its name and preserve jobs. Mondelez sees little antitrust risk given the limited geographic overlap of the two companies’ businesses, the source added.
“The board of directors of the company unanimously rejected the indication of interest and determined that it provided no basis for further discussion between Mondelez and the company,” Hershey said in a statement.
Hershey shares rose 16 percent to $ 113.05, while Mondelez rose 6.2 percent to $ 45.65.
Mondelez is the second-largest confectionary company globally while Hershey ranks number five, and their merger would put them in the top place at 18 percent of the market, according to market research firm Euromonitor International Ltd. The combined company would leapfrog Mars Inc, which has 13.3 percent of the global market.
A fusion of the two would give Oreos cookies maker Mondelez control over the production and distribution of its Cadbury brand chocolates in the United States, which Hershey currently holds the license to produce, paying royalties to Mondelez.
It would also give Mondelez the U.S. production and distribution rights for Kit Kat, one of the most popular chocolate brands in the world, which industry sources said would be a significant boost to Mondelez as a result of the deal.
Nestle SA (NESN.S) manufactures Kit Kat worldwide, but Hershey has the rights in the United States, paying Nestle royalties from sales.
HERSHEY TRUST
The bid pits Deerfield, Illinois-based Mondelez against the Hershey Trust, one of Pennsylvania’s wealthiest charities. The trust has about 81 percent of Hershey’s voting rights and in 2002 prevented the Hershey, Pennsylvania-based company from being acquired by Wm. Wrigley Jr. Co for $ 12 billion.
Pennsylvania’s attorney general also sued to block the deal, arguing it would hurt the local community.
A charity created by Hershey founder Milton Hershey to provide for the Milton Hershey School, a private school for children from low-income families, the trust has been the subject of an investigation recently by Pennsylvania’s Attorney General over conflicts of interest and mismanagement.
The trust’s chief compliance officer was put on leave last month after a leaked memo showed the board had spent nearly $ 4 million investigating conflicts of interest and insider-trading accusations against board members. A top trust official was also sacked in May and pled guilty to wire fraud.
STARTING POINT
Tigress Financial Partners LLC analyst Philip Van Deusen said he expected the offer price to increase, given the rise in Hershey’s shares.
“I think ($ 107) is a good starting place,” he said.
Analysts have been skeptical of takeover bids for Hershey in the past. “The Trust … is outwardly very committed to keeping the company independent,” Bernstein analyst Alexia Howard said in June last year. “So it’s pretty much impossible for an activist to get involved or for the company to be bought.”
Last year, William Ackman revealed his activist hedge fund Pershing Square had built a stake worth about $ 5.5 billion in Mondelez, in what was seen as an attempt to push the company to boost earnings or sell itself.
Ackman joined fellow activist Nelson Peltz as an investor in Mondelez.
(Reporting by Lauren Hirsch in New York; Additional reporting by Chris Prentice in New York and Sruthi Ramakrishnan in Bangalore; Editing by Lisa Von Ahn and Alan Crosby)
Stocks are opening moderately higher on Wall Street as traders feel less anxious about Britain’s vote last week to leave the European Union.
Bank stocks rose broadly in early trading Thursday after 30 institutions got clearance from the Federal Reserve to raise their dividends and buy back shares. Many of them announced plans to do so immediately after the Fed’s announcement late Wednesday.
Lions Gate Entertainment, which owns the "Orange Is the New Black" Netflix series, jumped 10% after announcing it would buy the cable channel Starz.
The Dow Jones industrial average rose 40 points, or 0.2%, to 17,735.
The Standard & Poor’s 500 index gained 3 points, or 0.2%, to 2,074. The Nasdaq composite climbed 5 points, or 0.1%, to 4,783.
CHICAGO — United Airlines and its flight attendants have tentatively agreed to a new contract that would boost top pay rates by as much as 31 percent and, for the first time, cover all of the airline's flight attendants under a single labor agreement.
A council of elected local union leaders with the Association of Flight Attendants unanimously approved submitting the agreement to United's 25,000 flight attendants for ratification, the council said in a letter posted on the union's website Tuesday evening.
It was just last Friday that Chicago-based United and the union announced they had agreed on the terms of a new contract that would bring all flight attendants under a single labor contract for the first time since the 2010 merger between United and Continental Airlines.
If ratified, the contract "will set new industry standards that push our careers forward as United Airlines seeks to restore our premiere status in the industry," the council members wrote.
Base pay rates for flight attendants at the top of the pay scale would rise by 18 to 31 percent, with double-digit percentage-point increases throughout the pay scale, said union spokeswoman Taylor Garland.
The tentative deal also includes profit-sharing, continuation of a flight attendant-specific health care plan with new medical plan options, and maintained and improved retirement plans.
United confirmed that the Association of Flight Attendants' leadership council approved the tentative agreement in a notice on a company website.
A timeline for when the vote will occur was not immediately available. If the contract is ratified, some changes would take effect immediately, with the rest becoming active in September, Garland said.
If approved, a joint contract would help United "finally put the last pieces of its merger together," said Henry Harteveldt, a travel industry analyst with Atmosphere Research Group.
Flight attendants from United and Continental would no longer operate under different work rules. Currently, flight attendants from each pre-merger airline can work only with flight attendants from the same airline on aircraft assigned to their airline.
The inability to mix flight crews and aircraft makes it tougher for United to recover when it faces delays, said Brian Karimzad, director of MileCards.com.
"Basically, they've been running two airlines under the hood when it comes to flight crews and assigning flights," Karimzad said. "This could help United be a more reliable airline."
A single contract should also improve the workplace culture, Harteveldt said. "When you have separate groups with separate rules, compensation structures and cultures, it's hard to create harmony," he said.
At the company's annual meeting this month, United CEO Oscar Munoz said the airline's labor issues remain a top priority. The airline recently negotiated separate deals with its pilots and dispatchers. United employees, including airport workers and security officers, ratified a new contract in April.
United is still working on a deal with its 9,000 mechanics. Mediated discussions between United and the International Brotherhood of Teamsters are scheduled through Thursday, according to United.
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United Airlines flight attendants are a step closer to be unified under one contract following the union leadership’s unanimous approval of a tentative contract. The 25,000 flight attendants will soon vote on whether to ratify the agreement.(Photo: Nick Ut, AP)
A tentative agreement that would bring all of United's flight attendants under a single contract for the first time is headed to a final vote.
Leaders of the Association of Flight Attendants green lighted the contract, clearing the way for United's 25,000 flight attendants to have the final say.
"We stand behind the tentative agreement and unanimously approved submitting it to AFA members for ratification,'' AFA's leadership said in a letter to the group's membership.
If the contract is approved, it will be a turning point for United, whose flight attendants have worked under separate contracts and been represented by different unions, since the carrier merged with Continental in 2010.
A lack of unity between employees who once worked for rival airlines has been just one of many problems dogging the United and Continental merger. The carrier has also trailed its large airline peers in on-time arrivals and financial performance. And it dealt with upheaval among its leadership last year when its previous CEO, Jeff Smisek, resigned amidst a corruption probe, and its new CEO, Oscar Munoz suffered a heart and underwent a heart transplant shortly after taking the helm.
Now, United is touting its improved on-time performance, fleet overhaul and new international business class that it hopes will help it win back the highly coveted corporate travelers who drifted away in recent years.
Gifts to grads might help but many college students still juggle student loans.(Photo: Susan Tompor)
Story Highlights
Some select a less expensive college — or one with a scholarship offer — to avoid too much debt.
Take a full-time workload of credits to try to graduate in four years, not five.
See if you can rent college text books or buy used ones.
Guideline: Every college dollar you borrow will cost about $ 2 by the time you pay off the debt.
Getting a college degree — and a job after graduating — is well worth juggling some college debt for many people. But you’re guaranteed to end up with nothing but regrets if you’ve got debt but no degree.
About 45% of people who are no longer in college and have student loan debt said that college was not worth the cost, according to a survey from the Consumer Reports National Research Center. About 1,500 Americans responded to the national survey in March.
Consumer Reports partnered with the Center for Investigative Reporting to examine student loans and a social media campaign dubbed #mydebtcouldbuy is part of the discussion.
What’s interesting is that those with second thoughts likely didn’t finish school; the survey noted that about 38% of that group upset about their debt didn’t graduate.
Committing to finishing strong and obtaining a college degree, it appears, would lead to a much happier financial picture.
“We don’t have a student debt problem, so much as a college completion problem,” said Mark Kantrowitz, publisher and vice president of strategy for Cappex.com.
“Students who drop out of college are four times more likely to default on their student loans than students who graduate, representing 63% of the defaults.”
Why do some drop out? Money, maybe they didn’t realize the full cost. Lack of academic or financial support. Conflicts at home or work.
Kantrowitz noted that the majority of dropouts at some schools take place during the first year or between the first and second years. It can help some students to seek out mentors and advisers earlier in the game; and budget before you borrow.
The six-digit horror stories involving student debt abound once again. The August cover of Consumer Reports is a bright, bold red with the headline: “I kind of ruined my life by going to college.”
The quote is attributed to a 32-year-old woman from Portland, Ore., who has $ 152,000 in student debt.
The troubling thing about only reading such headlines — and the article does include some practical tips for managing college debt — is that one might think that all college debt is a bad idea. It’s not.
On average, college grads in the Class of 2016 have a record level of about $ 37,000 in student loan debt for those with a bachelor’s degree. That’s up about 6% from last year, according to Kantrowitz’s calculations. About 71% of those graduating will do so with some student loans.
About 20% of the cost of college is covered by taking on college debt by parents and students, according to the “How America Pays for College 2016″ report released by Sallie Mae this week. The survey indicated that 13% all college costs are covered with student debt; 7% with loans taken on by parents.
The top two sources of money: About 34% of the cost was covered by scholarships and grants and 29% was covered by parent income and savings.
A key question, of course, has to be: How much is too much to borrow for college? Taking on $ 80,000 or $ 100,000 in college debt? How could most people imagine paying that off?
Sometimes, I think it’s too easy for all of us to just view our spending or borrowing in very narrow windows.
We look at what we spent on lunch yesterday, instead of how much we will spend on lunch for the year. We look at what we borrowed for college last semester, instead of adding up the total over four years or five years.
What will loan payments cost in the future?
Take someone who ends up with $ 60,000 in student loans.
Assuming 6% interest and a 10-year term, the borrower would face a bill of $ 666 a month under standard repayment plans, according to Kantrowitz. That adds up to $ 79,934 in total payments in 10 years.
The monthly bill could drop to $ 387 if you opted for a 25-year extended, repayment plan. That adds up to $ 115,975 in payments over 25 years.
The monthly payment could fall by about another $ 100 a month if you had an income of $ 40,000 and opted for an income-based repayment plan offered with federal student loans. But payments go up when your income goes up.
About 5% graduate with a bachelor’s degree end up with $ 60,000 or more in student loan debt based on 2011-12 data, Kantrowitz said. But that level of debt is more common among graduate students.
Whether you get into trouble paying your bills, of course, will depend much on how long it takes to find a job, how much you’re paid out of school, how much credit card debt you took on while in college, and where you end up living.
Don’t kid yourself into thinking you’ll be making $ 80,000 or $ 100,000 the minute after you leave your graduation ceremony.
On average, the Class of 2015 bachelor's degree graduates earned a starting salary of $ 50,219 — up 4.3% from their Class of 2014, based on a survey by the National Association of Colleges and Employers.
But remember that average is driven up by big salaries for engineering majors, computer science majors and mathematics and statistics degrees.
Before you borrow for college, research what kind of money you’d make the first year out of school.
A general guideline: Borrow less than that first year’s salary.
Mark Schneider, president of CollegeMeasures.org, said at the current low interest rates it could take about 10% to 12% of a college graduate’s gross income to make payments on college loans — if you borrowed an amount that’s about equal to your first year’s salary.
“It’s not comfortable but it’s manageable,” he said.
Schneider, who is also a vice president and institute fellow for the American Institutes for Research, said college students need to consider things like a return on investment and think about their field of study and the expected salaries.
“If you borrow $ 25,000 for a job that pays $ 75,000, that’s a great investment,” Schneider said.
Schneider’s work has been focused on building state-specific websites that provide pay information for college graduates from a given state. The idea is to help students identify in-demand jobs and potential careers in that state.
Sites include: LaunchMyCareerTN.org and LaunchMyCareerColorado.org and MyFutureTx.com.
To establish such web state-specific websites, Schneider said it’s necessary to get state agencies to agree to partner with CollegeMeasures.org to provide useful data.
Students can review salary information at sites like salary.com or payscale.com or the Bureau of Labor Statistics at bls.gov. Some research regarding pay for college graduates is also available at the Center on Education and the Workforce at Georgetown University.
Not surprising to many parents who are working, perhaps, but 78% of the unhappy student loan borrowers say they earn less than $ 50,000 a year, according to the Consumer Reports survey.
If you’re thinking about borrowing money for college, study what it’s going to take to pay the bill.
Contact Susan Tompor: stompor@freepress.com or 313-222-8876. Follow her on Twitter @Tompor.
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"Star Wars", the biggest selling videogame franchise in the Lego universe returns with "The Force Awakens", a collaboration of Lucasfilm, Lego, Warner Bros. and TT Gaming. Mark Kelly reports. Image: Warner Bros.
WASHINGTON—The largest U.S. banks got permission from regulators to return profits to investors, but the U.S. banking units of Deutsche Bank AG and Banco Santander SASAN1.30% were held back again as the Federal Reserve released the final results of its 2016 "stress tests."
Big firms such as Bank of America Corp. and Citigroup Inc.,C4.15% which have struggled on the tests in past years, passed this year, as the Fed issued a broadly positive verdict on the U.S. banking sector. The prospects of greater dividends and share buybacks is good news for bank investors, who have seen financial shares battered by crimped profits and last week's Brexit vote.
This is the second set of results released by the Fed in the past two weeks, assessing whether officials believe the biggest banks could continue to lend even during a deep recession. Last week, the largest U.S. banks breezed through the first round of tests with capital ratios well in excess of the amount the regulator views as a minimum, even when put through a hypothetical recession. The tests were created after the financial crisis.
In the second round, released Wednesday, all but two of the 33 large U.S. banks taking the tests won the Fed's endorsement of their risk-management chops and its go-ahead to increase dividends or share buybacks.
Morgan StanleyMS2.52% was among the banks that won approval for its capital returns, but it also received a rebuke: The Fed's approval is conditional, based on "weaknesses" the regulator found in the bank's internal process. The bank must submit a revised plan addressing its shortcomings by Dec. 29. If the Fed isn't satisfied with the bank's progress, it can freeze the capital distributions.
M&T Bank Corp.MTB1.73% gained the Fed's approval, but the Buffalo, N.Y.-based firm passed only after scaling back its proposal to distribute funds to shareholders, in order to ensure its capital buffers stayed above the minimums required by the Fed.
It was the only bank to take the so-called mulligan allowing banks to adjust their payout plans. Had the bank not done so, it would have failed the test by falling below two of the four required capital ratios in a hypothetical recession, the Fed said.
Overall, the Fed results should cheer bank investors after a rough few months. Shares in financial firms were hit hard by last week's vote by Britain to exit the European Union and as long-term interest rates have plummeted, threatening bank profitability.
While Brexit didn't play a direct role in the tests, the exams had included the prospect of severe recessions in the U.K., the European Union and the U.S.
Banks that received approval for their capital plans will be able to pay out as much as around two-thirds of projected net income for the coming four quarters, a senior Fed official said. That also means, though, that banks will continue to retain capital, which could also reassure investors worried about their ability to withstand any continuing Brexit-related market tumult.
The central bank rejected outright the capital plans of the U.S. banks owned by Germany's Deutsche Bank and Spain's Santander, as it did last year. The Fed cited improvements but said there was still "insufficient progress" by the firms in correcting flaws and meeting supervisors' expectations.
Both firms have been under significant regulatory scrutiny after being faulted for their shortcomings in predicting risk on the stress tests, as well as in other areas. Santander's U.S. bank is the first to fail the test three years in a row, and Deutsche Bank's subsidiary has now failed two years running.
Overall, the verdict reflects the Fed's view that the banking sector is much stronger than it was leading up to the 2008 bailouts. Bank regulators have steadily raised capital requirements for the largest banks since the crisis in an effort to make banks—and the financial system—more resilient and better able to absorb losses. The changes have forced banks to fund themselves with less borrowed money and more investor funds, such as common equity that can't flee when market turmoil strikes.
In the six years since the tests were first put in place, "the participating firms have strengthened their capital positions and improved their risk-management capacities," Fed governor Daniel Tarullo, the official overseeing the tests, said in a statement. "Continued progress in both areas will further enhance the resiliency of the nation's largest banks."
The stress tests, which test capital levels by putting banks through a hypothetical shock, were created during the financial crisis and helped end the panic in 2009 by showing investors big banks were stable. Congress made them mandatory in 2010, and the Fed in 2011 tied passing the test to approval to pay shareholder dividends.
The goal is to make sure banks can keep lending during the worst economic conditions, and to diminish the risk of big bank failures. In addition to the tests, big banks also face new requirements that they use stable funding sources and craft "living wills" to show how they could go through bankruptcy without needing a bailout or causing a broader economic crisis.
U.S. banks collectively had 12.2% high-quality capital as a share of assets in the first quarter of this year, more than twice the 5.5% level in the first quarter of 2009, the Fed said.
For Deutsche Bank and Santander, the Fed's rejection of those firms' capital plans effectively locks up some U.S. profits, which can't be sent home at a higher rate until they pass the tests.
Those firms don't currently have publicly announced plans to return capital home that would be affected by that restriction, a Fed official said.
Santander executives have said during the past couple of years that the regulatory troubles in the U.S. are partially the result of growing pains as the lender builds up from scratch a holding company to oversee its banking unit and consumer-lending subsidiary. But U.S. regulators have also faulted Santander for risk-management problems broadly, and investors and analysts say they are growing impatient with Santander's mess in the U.S.
The Deutsche Bank unit in question, Deutsche Bank Trust Corp., represents about 3% of the German lender's total global assets. A bigger test for Deutsche Bank will come in two years when its bigger, newly consolidated U.S. business—set up as what's known as an intermediate holding company—comes fully under stress-test review.
Two new entrants to this year's test—BancWest Corp., a subsidiary of France's BNP Paribas SA,BNPQY1.76% and TD Group U.S. Holdings LLC, which is owned by Toronto-Dominion BankTD0.85% —passed the Fed's yearly exercise.
The Fed changes the details of its recession scenario from year to year, so the specifics can hit one type of bank harder than another. This year, the Fed's hypothetical scenario envisioned the U.S. unemployment rate more than doubling to 10%, the stock market losing half of its value and financial markets becoming so topsy-turvy that short-term U.S. Treasury rates turn negative as investors pay the U.S. government to hold their money.
—Jenny Strasburg and Jeannette Neumann contributed to this article.
Write to Ryan Tracy at ryan.tracy@wsj.com and Donna Borak at donna.borak@wsj.com
