North America’s largest chocolate producer has acquired an 80% ownership interest in the manufacturer of China’s popular Golden Monkey confectionary and snacks brand.
As part of an ongoing commitment to elevate its presence in China, Hershey said its wholly-owned subsidiary, Hershey Netherlands B.V., signed an agreement to acquire 80% of Shanghai Golden Monkey Food Joint Stock Co., Ltd., or SGM, a privately held confectionery company based in Shanghai with annual sales of $225 million. Completion of the agreement is expected to occur in the second quarter of 2014 at which time SGM will operate as a stand-alone company reporting to Hershey’s international division.
“The agreement between Hershey and Shanghai Golden Monkey is a win for both companies,” said John P. Bilbrey, president and CEO of Hershey. “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.”
Hershey has increased its investment in China over the past several years and is said to be one of the fastest growing confection companies in China. The deal with SGM is intended to accelerate growth as Hershey builds on the success of SGM’s iconic brands, diverse product portfolio, in-country manufacturing and growing sales force to enhance service to 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, according to Hershey.
“Shanghai Golden Monkey is the type of business we’ve been focused on for potential (merger and acquisition),” said Humberto P. Alfonso, the president of Hershey International who will oversee SGM. “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.”
The deal follows other recent moves by Hershey in China including the opening of an Asia Innovation Center in the Jinqiao Research Park in the Pudong District of Shanghai. 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. The company’s product portfolio include Golden Monkey brand candy, chocolates, protein-based products and snack foods that are widely marketed across China. Notably, 75% of SGM’s sales are from non-chocolate products.