Hershey to acquire majority share of Shanghai Golden Monkey Food

December 20, 2013

The Hershey Co. has announced that its wholly-owned subsidiary, Hershey Netherlands B.V., has signed an agreement to acquire 80% 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.

SGM manufactures, markets, and distributes the well-known 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% 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.

“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 senior management team, including Founder, Chairman, and General Manager Zhao Qisan, have agreed to continue in their current roles alongside a few Hershey appointed executives.

Press release