Hershey Netherlands, a wholly-owned subsidiary of Hershey, has signed an agreement to acquire 80% stake in Shanghai Golden Monkey Food JSC (SGM) for an undisclosed amount.
Financial terms of the transaction were undisclosed.
With this deal, Hershey intends to build SGM's brands, diverse product portfolio, in-country manufacturing and growing sales force to accelerate its growth in China.
As per the agreement, SGM will operate as a standalone business reporting to Alfonso.
SGM produces Golden Monkey candy, chocolates, protein-based products and snack foods in China. About 75% of SGM net sales come from non-chocolate and chocolate candy segments, while protein-based bean products and other snack categories contribute the remaining.
SGM has more than 130 sales offices in five Chinese cities and employs about 1,700 sales representatives and about 2,000 distributors.
Hershey CEO John Bilbrey said that the strength of SGM's confectionery portfolio and overall distribution capabilities is an opportunity for the company to leverage scale.
"Additionally, SGM's focus on protein-based products and snacking is on-trend with Hershey's consumer-centric marketplace insights," Bilbrey added.
SGM founder, chairman and general manager Zhao Qisan said, "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."
Subject to China regulatory and SGM shareholder approval, the transaction is expected to close in the second quarter of 2014.
