Hershey Corp. will acquire Chinese candy maker Shanghai Golden Monkey Food Co. in a $584 million deal.
The manufacturer of chocolate Kisses, Reese's Peanut Butter Cups, Kit-Kat, and other candies will pay $498 million, plus take on $86 million in debt for the maker of Wedding Day candies and My Love chocolates.
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Hershey Netherlands B.V., a subsidiary of the Hershey, Pa.-based company, will add 80 percent of Shanghai Golden Monkey stock by the middle of 2014 and the rest in 2015. The Chinese company produces candies from five locations and is projecting $225 million in revenue, according to MarketWatch.com, citing Hershey.
Its stable of goods includes more than 200 varieties of candy and snacks sold in China, Southeast Asia, the U.S., Australia, New Zealand, Russia, Mongolia, Kazakhstan, and Latin America.
The move is meant to strengthen Hershey's foothold in China, which it sees as a rapidly growing market, according to USA Today.
"Shanghai Golden Monkey is the type of business we've been focused on for potential (mergers and acquisitions)," Hershey International President Humberto P. Alfonso said in a statement. "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."
Sales of chocolate, candies, and gum in China increased 46 percent from 2007 to 2012, to about $13 billion, according to MarketWatch, using data collected from research firm Euromonitor International.
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