Hershey to Acquire Chinese Food Company
The Hershey Company announces that its wholly-owned subsidiary, Hershey Netherlands B.V., has signed an agreement to acquire 80 percent of the iconic Shanghai Golden Monkey Food Joint Stock Co., Ltd. (SGM), a privately held confectionery company based in Shanghai, China. Completion of the agreement is expected to occur in the second quarter of 2014 and is subject to China regulatory and SGM shareholder approval.
Hershey has increased its investment in China over the past several years and is one of the fastest growing confection companies in China. With this transaction, Hershey intends to build on the success of SGM’s iconic brands, diverse product portfolio, in-country manufacturing and growing sales force to accelerate its growth in China, enhance its ability to serve Chinese consumers, and provide increased opportunities for employees in the country. At the same time, SGM will benefit from the scale and scope of Hershey to enable the sustainable, long-term development of SGM’s trusted brands.
This announcement builds on Hershey’s continuing commitment to the China market by providing world-class quality products to Chinese consumers. In May, Hershey announced the opening of its new Asia Innovation Center, located at the Jinqiao Research Park in the Pudong District of Shanghai. This is a fundamental step toward accelerating the company’s growth and enables its global capabilities to quickly develop and launch new products customized to the tastes of consumers in China and across the Asia region.
SGM manufactures, markets and distributes the well-known and award winning Golden Monkey branded products. The SGM portfolio, which also includes Golden Monkey candy, chocolates, protein-based products and snack foods, is widely marketed across China in many cities and rural areas. Approximately 75 percent of SGM net sales are within the non-chocolate and chocolate candy segments. The remainder of SGM net sales is concentrated in the fast growing protein-based bean products and other snack categories. SGM manufactures products in five cities and has more than 130 sales offices, approximately 1,700 sales representatives and about 2,000 distributors covering all regions and trade channels in China. SGM’s net sales have been growing double digits, on a percentage basis, and the company is expected to generate net sales of more than $225 million in 2013.
“The agreement between Hershey and Shanghai Golden Monkey is a win for both companies,” says John P. Bilbrey, president and chief executive officer of The Hershey Company. “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.”
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