Hershey Expands in China With Shanghai Golden Monkey Acquisition

635230377585052000goldenmonkey.jpg

19 Dec 2013 --- The Hershey Company 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.

Today’s 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,” said 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.”

Mr. Zhao Qisan, Founder, Chairman and General Manager of Shanghai Golden Monkey, said, “In less than 25 years, SGM products have become national, well-known, trusted brands in China. Hershey and SGM have similar cultures and strategies related to brand building and selling capabilities and we’re pleased that a company of Hershey’s stature sees the potential in our great company. We look forward to working with Hershey and leveraging the resources that both of us have to offer to the great benefit of Chinese consumers who will have even more choices for high-quality products after this transaction.”

“Shanghai Golden Monkey is the type of business we’ve been focused on for potential M&A,” said Humberto P. Alfonso, President, Hershey International. “It fits Hershey’s acquisition criteria: it is located in our primary international market, China; it is a pure play confectionery and snacks company; and it has distribution into channels where Hershey products have yet to penetrate. Additionally, the company has a strong history of innovation and product quality as evidenced by the outstanding reputation of its core brand, Golden Monkey, which has been nationally recognized as one of China’s most iconic brands.”

Subject to the transaction’s approval, SGM will operate as a standalone business reporting to Alfonso. Many of SGM’s talented senior management team, including Founder, Chairman and General Manager Mr. Zhao Qisan, have agreed to continue in their current roles alongside a few Hershey appointed executives. Hershey will make a cash payment to the seller at the time of closing. Hershey will release additional information about the acquisition in its Form 8-K filing with the Securities and Exchange Commission. The acquisition is not expected to affect Hershey’s previously announced adjusted earnings per share-diluted outlook for 2013 and 2014 provided on October 24, 2013. Excluding integration and transition costs, Hershey expects the acquisition to be slightly accretive on an adjusted basis in 2014.

Shanghai Golden Monkey Food Company, formerly known as Golden Monkey Group, was established in 1996. Staffed with more than 5,000 employees, with advanced equipment and technical expertise, the company has 10 sales regions supported by 15 sales branches with 130 sales offices throughout the country and has become a leading confectionery enterprise. Its product range includes Golden Monkey candy, chocolate, protein-based products, and snack foods. The Golden Monkey brand has received numerous awards, including: “China Well-known Trademark,” “China Top Brand,” “China Top Product,” “Excellent Enterprise in Chinese Candy Industry,” “National Food Safety Demonstration Company,” “Double Golden Awards of Asia-Pacific International Food & Processing Technology Expo,” and “Golden Award of 2nd Asia-Pacific APEC International Economic Trade Expo.”

Related Articles

Business News

Barry Callebaut Publishes Third GRI Report

19 Dec 2014 --- The Barry Callebaut Group – the world’s leading manufacturer of high-quality chocolate and cocoa products – has announced the publication of its GRI report 2013/14. The report details the company’s performance in a transparent manner and across its most important sustainability topics, focusing on the indicators of relevance to the company’s stakeholders.

Food Ingredients News

Rising Protein Trend Will Continue to Drive Demand in 2015

19 Dec 2014 --- Volac, one of Europe’s leading manufacturers of nutritional whey proteins, predicts the appetite for protein, in particular dairy proteins, will continue to drive the sports nutrition category into 2015 and beyond. And as already witnessed, this will ultimately lead to a bigger demand for protein-fortified everyday products to meet the growing demand from mainstream consumer markets.

Business News

Raisio to Renew the Organisation of its Brands Division

18 Dec 2014 --- Raisio Group will renew the organisation of its Brands Division that includes snacks and cereals, Benecol, Benemilk and confectionery.

Business News

Hershey Unveils World’s First Public 3-D Chocolate Candy Printing Exhibit

18 Dec 2014 ---- The Hershey Company, in partnership with 3D Systems, announced the December 19 debut of its 3-D Chocolate Candy Printing exhibit at Hershey’s Chocolate World Attraction.

Business News

Puratos Confirms its Commitment to the Sustainable Cocoa Industry

17 Dec 2014 --- Puratos, global leader in bakery, patisserie and chocolate products, has inaugurated a cocoa collection and fermentation plant (CCFP) in San Pedro province in Ivory Coast. Created in partnership with the French chocolate maker, Cémoi, this confirms Puratos’ strong commitment to long-term sustainability of Ivorian cocoa.

More Articles