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Hershey acquires China confectionery company

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The Hershey Company announced Friday that it has completed the initial acquisition of Shanghai Golden Monkey Food Joint Stock Co., Ltd. (SGM), a privately held confectionery company based in Shanghai, China.

The company said SGM will complement its existing portfolio in the region and expand its presence in China’s sugar confectionery and snacking markets. SGM, on the other hand, is expected to benefit from Hershey’s global brands, scale and marketing expertise.

At the initial closing on 26 September, Hershey’s wholly-owned subsidiary, Hershey Netherlands B.V., acquired 80 percent of the total outstanding shares of SGM at a price of CNY2,416.8 million (USD394 million). The remaining 20 percent of the shares of SGM will be acquired by Hershey Netherlands at a second closing, which is scheduled to occur on the one-year anniversary of the initial close, at a price of CNY604.2 million (USD98 million), subject to the parties obtaining necessary government and regulatory approvals and satisfaction of other closing conditions.

The total purchase price upon completion of the second closing will be equal to an enterprise value of CNY3,543.2 million (USD577 million).

“This strategic acquisition advances our international growth agenda and builds on our commitment to the China market by providing world-class, quality products to Chinese consumers,” said Humberto P. Alfonso, President, Hershey International.

Hershey’s has increased its investment in China over the past several years and is one of the fastest growing confection companies in China. Driven primarily by the Hershey’s Kisses and Hershey’s brands, in 2014, Hershey net sales in China are expected to be approximately USD200 million, an increase of about 40 percent versus 2013. In 2013, SGM net sales were CNY1,259 million (USD205 million), an increase of about 7 percent versus 2012.

 

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