Hershey to buy 51% stake in Godrej Beverages & Foods

Hershey, America’s largest chocolate and confectionery-maker, is acquiring majority stake in the food and beverage business of the Godrej Group. Hershey is acquiring 51% equity stake in Godrej Beverages & Foods for Rs. 238 crores or about $54 mn. Hershey would also license Godrej Beverages & Foods some of its trademark rights for a lump sum payment of about $2 mn in addition to royalty payments of 5% for domestic sales and 8% for exports.

With this investment, financial investor IL&FS will exit from the venture while the holdings of the Godrej Group and that of an individual investor A Mahendran would come down. Post-acquisition, Hershey would hold 51% equity while Godrej Industries would hold 43% stake with the remaining 6% to be held by A Mahendran, a senior executive with the Godrej Group. The deal values the equity stake of Godrej Industries, a listed arm of the Godrej Group, at Rs. 200 crores. The deal values Godrej Beverages & Foods at Rs. 466 crores. Hershey would pick up the majority stake through multiple transactions. This would include acquiring the 40% equity held by IL&FS, acquisition of the convertible preference shares held by IL&FS, Godrej Industries and Mr. Mahendran as also subscription to fresh issue of capital in the company.

Godrej Beverages & Food represents the foods and beverages business of the Mumbai-based Godrej Group. It was formed last year when Godrej Industries transferred its foods division to another group company Godrej Tea. The combined entity was renamed as Godrej Beverages & Food Limited. With a turnover of around Rs. 400 crores, the company is engaged in categories such as tea, edible oils, health drinks including soymilk, tomato puree, fruit drinks and bakery fats.

Read The Economic Times article.