Hershey to acquire majority stake in Chinese confectionery firm SGM

Hershey Netherlands, a wholly-owned subsidiary of chocolate producer The Hershey Company, has entered into an agreement to buy an 80% stake in Chinese confectionery firm Shanghai Golden Monkey Food (SGM), for an undisclosed amount.

The completion of the deal, which is subject to Chinese regulatory and SGM shareholder approvals, is expected in the second quarter of 2014.

With the proposed acquisition, Hershey aims to leverage SGM’s brands, diverse product portfolio, in-country manufacturing as well as growing sales force to speed up its growth in China.

The deal will also help Hershey improve its ability to address the needs of Chinese consumers, while providing increased opportunities for employees in the country.

The Hershey Company president and CEO John P Bilbrey said that the strength of SGM’s confectionery portfolio and overall distribution capabilities is an opportunity for the company to leverage scale to make Hershey’s and SGM’s brands even more powerful.

"Additionally, SGM’s focus on protein-based products and snacking is on-trend with Hershey’s consumer-centric marketplace insights," Bilbrey added.

Following the transaction, SGM will operate as a standalone business, with most of its senior management team continuing in their current roles alongside a few Hershey appointed executives.

SGM manufactures, markets and distributes Golden Monkey-branded products; its product range includes Golden Monkey candy, chocolates, protein-based products and snack foods.

The company produces products in five cities and has over 130 sales offices, around 1,700 sales representatives and nearly 2,000 distributors spread across all regions and trade channels in China.

In 2013, SGM is expected to generate net sales of over $225m.

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Image: The deal is subject to approval from Chinese regulators and SGM shareholders. Photo courtesy of Hannah Chapman.