The Hershey Company (“Hershey”) (NYSE: HSY) today announced that it has reached an agreement to acquire the 49 percent stake in Godrej Hershey Ltd. that it does not own, primarily from Godrej Industries Ltd. (“Godrej”) and another minority shareholder. Including the assumption of about $47.6 million in debt, which is already consolidated by Hershey as the majority shareholder, the company will own the Maha Lacto and Nutrine candy brands and the Jumpin and Sofit beverage brands as well as the related manufacturing facilities. The transaction is expected to close by the end of the third quarter and the new entity will transition to use the name Hershey India as it becomes a wholly owned subsidiary of The Hershey Company. As part of the transaction, the minority shareholders will receive an undisclosed cash consideration.
“India is a key focus market for The Hershey Company,” said J.P. Bilbrey, President and Chief Executive Officer, The Hershey Company. “We have a great deal of respect for Godrej. Our partnership provided us with insights and an understanding of the consumers and customers in India. 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.”
The transaction gives Hershey an opportunity to integrate Godrej Hershey into the company’s global business platform and leverage corporate resources across the chocolate and sweets and refreshment strategic business units. Over time, Hershey’s goal is to evolve into a faster growing India market leader in the food and beverage space.
“With this new phase of the Hershey business in India, we aim to drive growth in this important market through product innovation, brand building and investment in our people and processes,” said Matthew Lindsay, Managing Director, Hershey India. “Leveraging the learnings from our Godrej partnership and the strong management team in place, we are excited to move forward in this rapidly growing market,” Lindsay concluded.
For the year ended December 31, 2011, the Godrej Hershey joint venture had net sales of about $80 million. The portion of the net loss for the full year attributable to Hershey was approximately $7 million. When the Godrej Hershey joint venture was announced in 2007, annual net sales were about $70 million.
As a result of this transaction there is no change to the financial outlook provided by Hershey on July 26, 2012 in its second quarter earnings release.
