Hershey hits sweet spot with deal for China confectionery Golden Monkey

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The Hershey Co, North America's largest quality chocolate producer, has announced plans to acquire 80 percent of snack producer Shanghai Golden Monkey Food Joint Stock Co.

The acquisition will be done through Hershey Netherlands BV, a wholly owned subsidiary. It's expected to be completed in the second quarter of next year, subject to approval from Chinese regulators and shareholders.

Terms of the transaction weren't disclosed, but Hershey said it will make a cash payment for the stake. Golden Monkey (SGM) will operate as a stand-alone business, and its senior management team members will retain their roles.

"SGM is the type of business we've been focusing on for potential M&A. 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," said Humberto Alfonso, president of international operations at Hershey.

"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.”

Rumors of the acquisition began to circulate about one year ago.

Zhao Qisan, founder, chairman and general manager of SGM, said, "Hershey and SGM have similar cultures and strategies related to the building and selling of brands, and we're pleased that a company of Hershey's stature sees the potential in our great company.”

Industry insiders said the acquisition will help SGM integrate its businesses, explore more distribution channels and improve marketing.

Hershey's sales totaled about $7 billion in 2017. The privately owned SGM has seen double-digit growth in its net sales this year, which may reach $225 million.

Statistics from market research firm Euromonitor International show that Hershey has been selling mainly chocolate products in the Chinese mainland, with just a 2.2 percent market share in 2017. Competitor Mars Inc held a 43 percent market share.

Questions:

1. What is Hershey Co’s plan for China?

2. What will happen to Golden Monkey’s business?

3. What is Hershey’s market share in China?

Answers:

1. The chocolate producer will acquire 80 percent of snack producer Shanghai Golden Monkey Food Joint Stock Co.

2. Golden Monkey (SGM) will operate as a stand-alone business, and its senior management team members will retain their roles.

3. 2.2 percent market share in 2017.

About the broadcaster:

Nelly Min is an editor at China Daily with more than 10 years of experience as a newspaper editor and photographer. She has worked at major newspapers in the U.S., including the Los Angeles Times and the Detroit Free Press. She is also fluent in Korean.