Hershey’s buyout of Brazil’s Bauducco moves forward
Chocolate maker’s deal gets approval from Brazilian government.
Hershey is taking a huge step in the Brazilian market.
The company has received approval to acquire the remaining 49 percent of its joint venture with Bauducco in Brazil.
Bauducco, a well-known cookies and cakes brand in the Latin American country, is owned by Pandurata Alimentos. Back in 2008, Hershey had inked a distribution joint venture with Pandurata Alimentos to build its presence in Brazil.
And Reuters reports that the buyout will allow Hershey, “to expand independently in Latin America's largest economy.”
The decision to move forward with the buyout came after Pandurata Alimentos gave Hershey notice at the end of 2014 of its intent to sell its 49 percent interest to the candy company at an amount “equal to its fair value,” says Jeff Beckman, Hershey spokesman.
“Brazil is a key focus market for Hershey and acquiring the remaining interest in the JV gives us greater control to continue growing our brands there and reflects our commitment to this key market,” he adds.
Reuters says Brazil’s official gazette reported that, “Cade [ Brazil’s antitrust watchdog] said that Hershey's request to undo the partnership with Pandurata... poses no risk to free competition in the domestic chocolate market. The decision to end the partnership was announced earlier in the year.”
Hershey, which originally had 51 percent of the joint venture, agreed to acquire the remaining 49 percent stake that Pandurata had in April. The gazette did not have information on the size of the deal, Reuters says.
The chocolate maker, which has long been strong in the U.S. market, is working to expand its international presence.
But in an Aug. 7 statement about its latest quarterly report with the Securities and Exchange commission, the company reveals that things aren’t going as well as it had hoped.
“Macroeconomic challenges and changing consumer shopping behavior in China were a headwind,” says John P. Bilbrey, chairman, president and ceo, The Hershey Co.
Specifically, Hershey says, “Thus far in 2015, SGM net sales and profitability have been significantly lower than initial expectations.”
And, “International and other net sales, excluding the benefit of the SGM acquisition and unfavorable foreign currency exchange rates, declined versus a year ago due primarily to the underperformance of Hershey’s chocolate business in China.”
Only time will tell whether or not Hershey has a good day — or as the Brazillians say, “bom dia” — in Brazil or not.