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

Corbion Reports Sales Uplift in Q1 with Food Business Topping Expectations

25 Apr 2016 --- Corbion has reported a 3.8 percent increase in year-on-year sales in the first quarter, driven by strong growth in its food ingredients business with a particularly strong showing in Latin America.

Food Ingredients News

Welch’s Global Ingredients Boosts Beverage Offering with Their New Niagara Grape Juice

22 Apr 2016 --- Welch’s Global Ingredients Group has strengthened its product portfolio with 100% Niagara grape juice – a unique golden American superfruit juice that delivers a sophisticated flavor profile and naturally nutritious polyphenols.

Business News

New Innovation Center at Puratos Russia Marks Objective to Provide its Partners with the Best Facilities

22 Apr 2016 --- On  March 17th  2016, Puratos Russia officially opened its New Innovation Center, located on the current premises of the factory in the Podolsk region.

Business News

Questions for UK Retailers as Products Shrink in Size and Increase in Price

20 Apr 2016 --- McVitie’s Digestives and PepsiCo’s Tropicana have followed PG Tips and Hovis and been named and shamed by a consumer group, which has found evidence that food giants are shrinking the size of products while retailers are increasing the price.

Food Ingredients News

Mars Warns Consumers With Labels on High Sugar Sauces to be Only Eaten Once a Week

18 Apr 2016 --- Mars Food have announced a new global Health and Wellbeing Ambition to create and promote healthier food choices and to encourage consumers to cook and share healthier meals with others. “Everyday” and “occasional” meals will also be reformulated to incorporate reduced sodium and sugar levels.

More Articles