Hershey to Acquire All Outstanding Shares of the Godrej Hershey Joint Venture
HERSHEY, Pa.--(BUSINESS WIRE)--Sep. 7, 2012-- 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.
Safe Harbor Statement
This release contains statements that are forward-looking. These statements are made based upon current expectations that are subject to risk and uncertainty. Because actual results may differ materially from those contained in the forward-looking statements you should not place undue reliance on the forward looking statements when deciding whether to buy, sell or hold the Company’s securities. Factors that could cause results to differ materially include, but are not limited to: issues or concerns related to the quality and safety of our products, ingredients or packaging; changes in raw material and other costs; selling price increases, including volume declines associated with pricing elasticity; market demand for our new and existing products; increased marketplace competition; disruption to our supply chain; failure to successfully identify, execute and integrate acquisitions, divestitures and joint ventures; changes in governmental laws and regulations, including taxes; political, economic, and/or financial market conditions; risks and uncertainties related to our international operations and related growth targets; disruptions, failures or security breaches of our information technology infrastructure; the impact of future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionery industry, including risks of subsequent litigation or further government action; pension cost factors, such as actuarial assumptions, market performance and employee retirement decisions and funding requirements; the ability to implement our supply chain realignment initiatives within the anticipated timeframe in accordance with our cost estimates and our ability to achieve the expected ongoing annual savings from these initiatives; and such other matters as discussed in our Annual Report on Form 10-K for 2011.
All information in this press release is as of September 7, 2012. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
About The Hershey Company
The Hershey Company (NYSE: HSY) is the largest producer of quality chocolate in North America and a global leader in chocolate and sugar confectionery. Headquartered in Hershey, Pa., The Hershey Company has operations throughout the world and approximately 12,000 employees. With revenues of more than $6 billion, Hershey offers confectionery products under more than 25 brand names, including such iconic brands as Hershey's, Reese's, Hershey's Kisses, Hershey's Bliss, Hershey's Special Dark, Kit Kat, Twizzlers, Jolly Rancher and Ice Breakers. Hershey also offers premium and artisan chocolate products under such brands as Scharffen Berger and Dagoba through the Artisan Confections Company, a wholly owned subsidiary. The company is focused on growing its presence in key international markets such as China and Mexico while continuing to build its competitive advantage in the United States and Canada.
For more than 100 years, The Hershey Company has been a leader in making a positive difference in the communities where its employees live, work and do business. Corporate Social Responsibility is an integral part of the company’s global business strategy, which includes goals and priorities focused on fair and ethical business dealings, environmental stewardship, fostering a desirable workplace for employees, and positively impacting society and local communities.
Milton Hershey School, established in 1909 by the company's founder and administered by Hershey Trust Company, provides a quality education, housing, and medical care at no cost to children in social and financial need. Students of Milton Hershey School are direct beneficiaries of The Hershey Company's success.
Source: The Hershey Company
The Hershey Company
Mark Pogharian, 717-534-7556
Leigh E. Horner, 717-508-1247