HERSHEY, PA. — Hershey Netherlands B.V., a wholly-owned subsidiary of The Hershey Co., has completed the initial closing and acquired an 80% stake in Shanghai Golden Monkey Food Joint Stock Co., Ltd. (SGM), a privately held confectionery company based in Shanghai, China, for approximately $394 million. The remaining 20% stake in the business is expected to be acquired by Hershey Netherlands for approximately $98 million at a second closing, which is scheduled to occur on the one-year anniversary of the initial closing. In total, Hershey will pay about $577 million for SGM, which includes net debt of approximately $85 million.

Hershey first announced its intent to acquire SGM in December 2013.

“This strategic acquisition advances our international growth agenda and builds on our commitment to the China market by providing world-class, quality products to Chinese consumers,” said Humberto P. Alfonso, president of Hershey International. “We will leverage Shanghai Golden Monkey’s iconic brands, diverse product portfolio and strong sales force to build on the organic growth we delivered in China over the past several years. Acquiring such an iconic and scalable brand increases our opportunity to drive top-line growth and create value for shareholders over the long term.”

Hershey has identified China as its No. 1 priority international market for growth. The company has increased its investment in China over the past several years and is one of the fastest growing confection companies in China. Driven primarily by the Hershey’s Kisses and Hershey’s brands, Hershey net sales in China are expected to be approximately $200 million in 2014, up about 40% from 2013. In 2013, SGM net sales were approximately $205 million, an increase of about 7% versus 2012.

Founded in 1996, SGM’s brands include Golden Monkey, which includes Golden Monkey candy, chocolates, protein-based products and snack foods. The company’s brands are marketed across the country in both cities and rural areas. With the acquisition of SGM, China is expected to become Hershey’s second largest market by year-end 2015 with net sales of around $500 million on a constant currency basis. SGM has more than 5,000 employees and operates 10 sales regions supported by 15 sales branches with 130 sales offices throughout China.

Hershey said it will work with SGM senior leaders on integration, portfolio transition and development, and distribution synergies that should enable the combined companies to continue to deliver category-leading, double-digit net sales growth in China.

The acquisition is not expected to affect Hershey’s previously announced adjusted earnings per share-diluted outlook for 2014 provided on July 24, 2014. Excluding integration and transition costs, Hershey expects the acquisition to be slightly accretive on an adjusted basis in 2015.