U.S.-based chocolate-maker Hershey Company has purchased a majority stake in a Shanghai-based candy company.
Hershey's wholly-owned subsidiary, Hershey Netherlands B.V., has signed an agreement to acquire 80% of Shanghai Golden Monkey Food Joint Stock Company Ltd., a privately-held confectionery company. Completion of the agreement is expected to occur in the second quarter of 2014 and is subject to China regulatory and SGM shareholder approval.
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.
Approximately 75% 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.
Hershey will make a cash payment to the seller at the time of closing, and Hershey expects the acquisition to be slightly accretive on an adjusted basis in 2014.