The Hershey Company (NYSE: HSY), a global confectionary leader known for bringing goodness to the world through its delicious chocolate, sweets, mints, beverages and snacks, announced that it has completed the initial closing and acquired an 80 percent stake in the iconic Shanghai Golden Monkey Food Joint Stock Co., Ltd. (SGM), a privately held confectionery company based in Shanghai, China.

The combination of Hershey and SGM will accelerate both companies’ growth strategies. SGM’s well-established, trusted brand name and diverse product offerings provide Hershey with a meaningful presence in China’s sugar confectionery and snacking markets, and complements Hershey’s existing portfolio in the region. At the same time, SGM will benefit from Hershey’s global scale and recognizable brands and marketing expertise. Hershey will continue to invest in SGM brands and go-to-market capabilities enabling the company to deliver its popular products to more consumers throughout China.

At the initial closing on September 26, 2014, Hershey’s wholly-owned subsidiary, Hershey Netherlands B.V., acquired 80 percent of the total outstanding shares of SGM at a price of RMB 2,416.8 million (approximately USD $394 million). The remaining 20 percent of the shares of SGM will be acquired by Hershey Netherlands at a second closing, which is scheduled to occur on the one-year anniversary of the initial close, at a price of RMB 604.2 million (approximately USD $98 million), subject to the parties obtaining necessary government and regulatory approvals and satisfaction of other closing conditions. The total purchase price upon completion of the second closing will be equal to an enterprise value of RMB 3,543.2 million (approximately USD $577 million), which includes the net debt of RMB 522.2 million (approximately USD $85 million) limit set for the September 2014 close.

“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, 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.”

China is Hershey’s number one 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, in 2014, Hershey net sales in China are expected to be approximately $200 million, an increase of about 40 percent versus 2013. In 2013, SGM net sales were RMB 1,259 million (approximately USD $205 million), an increase of about 7 percent versus 2012.

The addition of SGM gives Hershey a well-known and award-winning brand in China, Golden Monkey, which includes Golden Monkey candy, chocolates, protein-based products and snack foods. SGM’s trusted brands are widely marketed across the country in both cities and rural areas. With the acquisition of SGM, China is expected to be Hershey’s second largest market by year-end 2015 with net sales of around $500 million on a constant currency basis. Hershey and SGM senior leaders will work collaboratively 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.

About The Hershey Company

The Hershey Company (NYSE: HSY), headquartered in Hershey, Pa., is a global confectionery leader known for bringing goodness to the world through its chocolate, sweets, mints and other great-tasting snacks. Hershey has approximately 13,000 employees around the world who work every day to deliver delicious, quality products. The company, which has more than 80 brands around the world that drive over $7.1 billion in annual revenues, includes such iconic brand names as Hershey's, Reese's, Hershey's Kisses, Jolly Rancher and Ice Breakers. Hershey is focused on growing its presence in key international markets while continuing to build its competitive advantage in North America. Additionally, Hershey is poised to expand its portfolio into categories beyond confectionery, finding new ways to bring goodness to people everywhere.

At Hershey, goodness has always been about more than delicious products. For 120 years, Hershey has been committed to good business by operating fairly, ethically and sustainably to make a positive impact on society. This means contributing to a better life for its employees, consumers, communities, and, ultimately, creating a bright future for children in need. This commitment is exemplified by the Milton Hershey School, established in 1909 by the company's founder and administered by Hershey Trust Company. The children who attend the school receive education, housing, and medical care at no cost — thriving as direct beneficiaries of The Hershey Company's success.

About Shanghai Golden Monkey Food Company

Shanghai Golden Monkey Food Company, formerly known as Golden Monkey Group, was established in 1996. Staffed with more than 5,000 employees, with advanced equipment and technical expertise, the company has 10 sales regions supported by 15 sales branches with 130 sales offices throughout the country and has become a leading confectionery enterprise. Its product range includes Golden Monkey candy, chocolate, protein-based products, and snack foods. The Golden Monkey brand has received numerous awards, including: “China Well-known Trademark,” “China Top Brand,” “China Top Product,” “Excellent Enterprise in Chinese Candy Industry,” “National Food Safety Demonstration Company,” “Double Golden Awards of Asia-Pacific International Food & Processing Technology Expo,” and “Golden Award of 2nd Asia-Pacific APEC International Economic Trade Expo.”

SGM focuses on operating a sustainable business through its management of a diversified business portfolio. The company has focuses on people development, scientific innovation capabilities, and contributing to society through corporate social responsibility initiatives.

Safe Harbor Statement

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Many of these forward-looking statements can be identified by the use of words such as “intend,” “believe,” “expect,” “anticipate,” “should,” “planned,” “projected,” “estimated,” and “potential,” among others. 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 manufacturing operations or supply chain; failure to successfully 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; disruptions, failures or security breaches of our information technology infrastructure; the impact of future developments related to civil antitrust lawsuits and the possible investigation by government regulators of alleged pricing practices by members of the confectionery industry in the United States; and such other matters as discussed in our Annual Report on Form 10-K for the year ended December 31, 2013. All information in this press release is as of September 26, 2014. 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.