Hershey to acquire rest of Indian j.v. partner

by Eric Schroeder
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HERSHEY, PA. — The Hershey Co. has agreed to acquire the 49% stake in Godrej Hershey Ltd. that it does not own, primarily from Godrej Industries Ltd. and another minority shareholder. As part of the transaction, Hershey will take on about $47.6 million in debt, which is already consolidated by Hershey as the majority shareholder.

With its full ownership stake, Hershey will own the Maha Lacto and Nutrine confectionery 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 of the name Hershey India as it becomes a wholly owned subsidiary of The Hershey Co.

As part of the transaction, the minority shareholders will receive an undisclosed cash consideration.

“India is a key focus market for The Hershey Co.,” said J.P. Bilbrey, president and chief executive officer of Hershey. “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.”

Hershey said the transaction will allow it 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 said its 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 of 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.”

For the year ended Dec. 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.
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