Hershey completes initial purchase of Shanghai Golden Monkey

The Hershey Company announced that it has completed the initial closing and acquired an 80 percent stake in the iconic Shanghai Golden Monkey Food Joint Stock Co., Ltd. (SGM), a privately held confectionery company based in Shanghai, China. The combination of Hershey and SGM will accelerate both companies’ growth strategies. SGM’s well-established, trusted brand name and diverse product offerings provide Hershey with a meaningful presence in China’s sugar confectionery and snacking markets, and complements Hershey’s existing portfolio in the region. At the same time, SGM will benefit from Hershey’s global scale and recognizable brands and marketing expertise. Hershey will continue to invest in SGM brands and go-to-market capabilities enabling the company to deliver its popular products to more consumers throughout China.

At the initial closing on September 26, 2014, Hershey’s wholly-owned subsidiary, Hershey Netherlands B.V., acquired 80 percent of the total outstanding shares of SGM at a price of approximately USD 394 m. The remaining 20 percent of the shares of SGM will be acquired by Hershey Netherlands at a second closing, which is scheduled to occur on the one-year anniversary of the initial close, at a price of approximately USD 98 m, subject to the parties obtaining necessary government and regulatory approvals and satisfaction of other closing conditions. The total purchase price upon completion of the second closing will be equal to an enterprise value of approximately USD 577 m, which includes the net debt of approximately USD 85 m limit set for the September 2014 close.

China is Hershey’s number one priority international market for growth. The company has increased its investment in China over the past several years and is one of the fastest growing confection companies in China. Driven primarily by the Hershey’s Kisses and Hershey’s brands, in 2014, Hershey net sales in China are expected to be approximately USD 200 m, an increase of about 40% versus 2013. In 2013, SGM net sales were approximately USD 205 m, an increase of about 7% versus 2012.

The addition of SGM gives Hershey a well-known and award-winning brand in China, Golden Monkey, which includes Golden Monkey candy, chocolates, protein-based products and snack foods. SGM’s trusted brands are widely marketed across the country in both cities and rural areas. With the acquisition of SGM, China is expected to be Hershey’s second largest market by year-end 2015 with net sales of around USD 500 m on a constant currency basis.

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