Hershey to acquire iconic Chinese confectionery firm


- Last updated on GMT

Related tags Chocolate Snack food The hershey company

Hershey said the deal would bring new distribution channels for its products
Hershey said the deal would bring new distribution channels for its products
Hershey Netherlands B.V. has signed an agreement to acquire an 80% stake in Chinese confectionery and snack firm Shanghai Golden Monkey Food Company (SGM) - and the remaining 20% in 2015.

Hershey Netherlands B.V. is a wholly owned subsidiary of The Hershey Company, which said in a June webcast that it was looking for potential acquisition targets, with a potential $30bn to spend. 

Hershey Netherlands will pay about $498m (RMB 3,021m) in cash and assume net debt of approximately $86m (RMB 522.2m).

The company said SGM’s net sales have been growing in double digits and are expected to reach $225m this year.

Hershey spokesperson Sharon Tang told this publication that while the company does not break down its revenue by country, it aims to increase international revenue to 25% of its business.

"China is expected to be Hershey’s second largest market after North American by 2017 and this acquisition puts us on track to achieve that goal,"​ she said.

“Shanghai Golden Monkey is the type of business we’ve been focused on for potential M&A,”​ said Hershey International president Humberto Alfonso.

“It fits Hershey’s acquisition criteria: It is located in our primary international market, China; it is a pure play confectionery and snacks company; and it has distribution into channels where Hershey products have yet to penetrate. Additionally, the company has a strong history of innovation and product quality as evidenced by the outstanding reputation of its core brand, Golden Monkey, which has been nationally recognized as one of China’s most iconic brands.”

Apart from SGM’s Golden Monkey brand of candy, the company also makes chocolates, protein-based bean products and snack foods, which are marketed across China. About three-quarters of the company’s net sales are in chocolate and non-chocolate candy. Tang said that Chinese consumers tend to prefer less sweet candy, and milk candies in particular. 

SGM manufactures its products in five cities and has more than 130 sales offices in China.

Hershey president and CEO John Bilbrey said in a statement: “The strength of SGM’s confectionery portfolio and overall distribution capabilities, especially within the traditional trade, is an opportunity for us to leverage scale to make the iconic brands of Hershey and SGM even more powerful. Additionally, SGM’s focus on protein-based products and snacking is on-trend with Hershey’s consumer-centric marketplace insights.”

Completion of the initial part of the acquisition is expected in the second quarter of 2014 and is subject to the approval of Chinese competition authorities and SGM shareholders. The remaining 20% of shares are due to be acquired a year later, Hershey said.

UPDATE: This story was updated four hours after initial publication to include financial details of the deal, which were released by Hershey during US business hours.

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