Hershey Company acquires 80% stake in Shanghai Golden Monkey

Global confectionary manufacturer, The Hershey Company, has acquired an 80% stake in Shanghai-based privately owned confectionery company Shanghai Golden Monkey (SGM).

The move will help Hershey’s enter the sugar confectionery and snacking markets of China, while SGM will benefit from Hershey’s global scale and recognisable brands and marketing expertise.

Hersey’s will continue to invest in SGM brands so it can deliver its products throughout China.

Around 80% of the company’s shares were acquired by Hershey Netherlands, which is a wholly owned subsidiary of Hershey’s, for approximately $394m. The remaining 20% will be acquired by the company at a second closing, which will occur on the one-year anniversary of the initial close, at a price of approximately $98m.

Hershey International president Humberto P Alfonso said: "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.

"We will leverage Shanghai Golden Monkey’s iconic brands, diverse product portfolio and strong sales force to build on the organic growth we delivered in China over the past several years. Acquiring such an iconic and scalable brand increases our opportunity to drive top-line growth and create value for shareholders over the long term."

Hershey’s net sales in China are expected to be around $200m, which is a 40% increase from 2013.

With the acquisition, China is expected to become Hershey’s second largest market by the end of 2015, with estimated sales of $500m.

Leaders from both companies will work on integration, portfolio transition and development and distribution synergies to help meet the sales target in China.

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Image: Hershey’s has acquired 80% shares of Shanghai Golden Monkey . Photo: courtesy of Mister GC / freedigitalphotos.net.