Hershey to buy out minority shareholders in Indian confectionery JV

US chocolate manufacturer Hershey has entered into an agreement to buy out the minority shareholders in its Indian confectionery and beverage joint venture – Godrej Hershey – for an undisclosed amount.

Under the agreement, the company will acquire a 43% stake from India-based Godrej Industries and a 6% stake from A Mahendran, director on the board of Godrej Hershey.

The acquisition, which includes assumption of $47.6m in debt, will enable the company to gain ownership of Maha Lacto and Nutrine candy brands and the Jumpin and Sofit beverage brands as well as the related manufacturing plants.

The deal is expected to be completed by the end of third quarter of fiscal 2013, and the new company will take up the name Hershey India, as it will become a fully owned subsidiary of Hershey.

Hershey president and chief executive officer JP Bilbrey said that India is an important focus market for the company.

"We’ll make the necessary investments in India to accelerate growth, leveraging our core strengths and business model," Bilbrey added.

With this transaction, Hershey plans to leverage its resources across its chocolate and sweets and refreshment strategic business units, and strengthen its presence in the Indian food and beverage category.

Hershey India managing director Matthew Lindsay said the company plans to achieve growth in the country through product innovation, brand building and investment in people and processes.

Godrej Hershey, which was established in 2007 as a joint venture between Hershey and Godrej, operates in multiple categories such as confectionery, beverages, and grocery products, and owns brands such as Hershey, Mahalacto, Nutrine, Jumpin & Sofit.

For the year ended 31 December 2011, the joint venture had net sales of $80m, up 14.3% since 2007, and for the fiscal year ended 31 March 2012, it reported net sales of $69.73m with losses of $13.37m.

Hershey noted that this transaction will not change the financial outlook provided by the company on 26 July 2012, in its second quarter earnings release.

---

Image: Godrej Hershey, Hershey’s Indian joint venture with Godrej, manufactures confectionery brands such as Maha Lacto and Nutrine. Photo: Godrej Hershey.