By Kenan Machado
MUMBAI--Hershey Co. (HSY) said it agreed to buy out the minority
shareholders in its loss-making Indian candy and beverage venture
for an undisclosed sum, clearing the decks for the American firm to
compete on its own in a market dominated by rivals Kraft Foods Inc.
(KFT) and Nestle S.A. (NSRGY).
The Hershey, Pennsylvania-based firm, will buy the 43% stake in
venture Godrej Hershey from India's Godrej Industries Ltd.
(500164.BY) and another 6% from another unnamed minority
shareholder, a press releases from Hershey and Godrej said.
Hershey said it will assume about $47.6 million in debt along
with the venture's related manufacturing facilities and candy
brands Maha Lacto and Nutrine and beverage brands Jumpin and
Sofit.
"India is a key focus market," said J.P. Bilbrey, president and
chief executive at Hershey. "We'll make the necessary investments
in India to accelerate growth," he added.
For the year ended Dec. 31, 2011, the Godrej Hershey venture had
net sales of about $80 million, up just 14.3% since the venture was
announced it 2007 when annual net sales were about $70 million,
Hershey said. For the fiscal year ended March 31, 2012, the venture
had net sales of $69.73 million with losses of $13.37 million,
Godrej said.
The transaction won't change the financial outlook provided by
Hershey on July 26 in its second quarter earnings release, Hershey
said.
-Write to Kenan Machado at kenan.machado@dowjones.com
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