US confectionery firm Hershey has entered into an agreement to acquire 49%stake in Godrej Hershey that it does not own from India's Godrej Industries and another minority shareholder.
This deal is in line with the company's plan to strengthen its presence in food and beverage segment in India.
As a part of the agreement,the company will acquire 43%stake from Godrej and 6%stake from A Mahendran,director on the board of Godrej Hershey.
The deal,which includes an assumption of$47.6m in debt,is expected to close by the end of the third quarter.
Following the acquisition,Hershey will own the Maha Lacto and Nutrine candy brands and the Jumpin and Sofit beverage brands as well as the related manufacturing facilities.The new entity will use the name Hershey India as it becomes a wholly owned subsidiary of Hershey.
Hershey president and chief executive officer JP Bilbrey said that India is a key focus market for the company.
"Confectionery and beverage category growth in India is solid and we're excited about our opportunities.We'll make the necessary investments in India to accelerate growth,leveraging our core strengths and business model,"Bilbrey added.
Formed in 2007,Godrej Hershey operates in multiple categories such as confectionery,beverages,and grocery items.For the year ended 31 December 2011,the Godrej Hershey venture had net sales of about$80m,up just 14.3%since the venture was established it 2007.For the fiscal year ended 31March 2012,the venture reported net sales of$69.73m with losses of$13.37m.
Hershey noted that this transaction would not change the financial outlook provided by the company on 26 July 2012 in its second quarter earnings release.
