Looking back at the original intention, this acquisition that lasted six years has been a complete failure for Hershey. A year later, news of Golden Monkey being sold has resurfaced, but the potential buyer has changed from Zhao Qisan to COFCO Group.

News of the sale resurfaces Various signs indicate that the American candy giant Hershey Company (hereinafter referred to as Hershey) has decided to say goodbye to Chinese candy company Golden Monkey (hereinafter referred to as Golden Monkey).

In fact, news that Hershey intends to sell Golden Monkey has been circulating for a long time. Last July, it almost fell into the hands of its founder Zhao Qisan.

"At that time, it was a partial buyback, but the high-profile Zhao Qisan unilaterally announced the news before the negotiations were finalized, causing the two sides to part on bad terms. But this time, it should not be in vain," a source told New Financial Observer. Since before the Spring Festival this year, the sale has become more apparent. Various rumors circulated within the company, such as selling to Mars or to someone else, but not to Zhao Qisan...

It seems that Zhao Qisan, who once brought Golden Monkey into Hershey's arms, is now on Hershey's blacklist.

Of course, if you understand the history of the Hershey-Golden Monkey alliance, you know that Hershey has its reasons. Not to mention the premature leak of information during the buyback negotiations, the fact that they nearly ended up in court before the remaining 20% of the acquisition offer was settled shows that trust between Hershey and Zhao Qisan is unlikely to be restored.

At that time, Hershey publicly stated that after a preliminary fair value assessment of Golden Monkey, its net sales and profitability were significantly lower than initially expected, and it recorded a goodwill impairment of up to $280.8 million for Golden Monkey. It was not until February 2016 that Hershey completed the purchase of the remaining 20% of Golden Monkey for 235.3 million yuan.

Back to the present, "This year, Golden Monkey's plans only extend to June; it should be sold." In April, such news circulated in the industry.

The reality is, "A few days ago, the factory issued the latest production plan, and indeed there is no production plan for June. However, since it's not yet the last week of May, we can't completely rule it out," a Hershey employee told New Financial Observer.

In his view, if there is indeed no production plan for June, then the sale of Golden Monkey is basically a foregone conclusion. "Although Hershey has been reducing Golden Monkey's product range, June is also the best time for stocking up. Normally, they should be running at full capacity."

Drifting apart Perhaps in preparation for the sale, Hershey is actively making arrangements.

First, layoffs. If we don't count Hershey's drastic cuts to Golden Monkey employees in 2016, since the news of Zhao Qisan's intention to buy back Golden Monkey last year, former Golden Monkey employees working at Hershey have been leaving in batches.

"Employees are being laid off every month, with as many as 60 in a month and as few as 10," the aforementioned employee said.

Through various versions of "Employee Labor Relations Adjustment Measures" and "Employee Labor Contract Expiration Termination Measures," Hershey is using different "compensation plans" to let employees go.

"From the terms of agreement termination or modification, there is suspicion of disguised layoffs," Xu Baotong, partner of Shanghai Yuanying Law Firm, told New Financial Observer. In his view, the terms in the above "measures" are quite harsh, and in fact, employees have "no choice."

In the view of the aforementioned employee, after the employee rights protection incident in 2016, Hershey has become smarter. They no longer lay off hundreds at once but choose to slowly "kill." "The factory's workforce has decreased by 50%-60% compared to last year. Even if employees are dissatisfied with the compensation terms, they cannot form a united front and can only reluctantly accept."

On the other hand, assets of Golden Monkey acquired by Hershey have also frequently been rumored to be for sale. Golden Monkey's Shanghai factory, Xianyang factory, Yudong factory...

In March this year, Hershey sold some assets of one of Golden Monkey's factories as "junk." In fact, production had ceased there long ago.

"Office desks, chairs, air conditioners, and production equipment were sold by weight. It's hard to describe how miserable it was... We worked there for many years, and our feelings are mixed..." another source told New Financial Observer.

In the photos taken at the scene, the empty factory buildings and offices were covered in thick dust; a photo of Zhao Qisan speaking and a pile of desks and chairs were left on the dusty floor; air conditioners removed from the corridor stood in a row... These formed a stark contrast with the slogan still hanging on the factory roof: "Build a national brand, build a century-old store," which was quite ironic.

COFCO may be the buyer Since Hershey publicly disclosed the acquisition of Golden Monkey in 2013, over the past six years or more, Hershey seems to have tried its best but still failed to have a good life with the monkey it "married" at a high price.

"After the acquisition, the two companies can share warehouses and logistics, and help Hershey deepen distribution to China's second- and third-tier cities where Golden Monkey excels," was the reason given by Hershey's international president at the time.

Now, things have changed.

Interestingly, this time, the potential buyer for Golden Monkey may be COFCO Group.

"Before the Spring Festival this year, COFCO Group commissioned a third-party company to conduct an audit and inventory of Golden Monkey..." the aforementioned source said. Because it relates to their livelihood, the aforementioned employee also heard this news and said it was "impressive."

However, it is puzzling that COFCO Group once had a brand more valuable than Golden Monkey, "Jindi," which was sold by COFCO. "If they really take over Golden Monkey, it's hard to know their intentions," a candy industry practitioner told New Financial Observer.

Not understanding doesn't mean it's unreasonable. "COFCO has always been a buyer of distressed assets," a candy industry professional manager said.

Regarding the authenticity of the news about taking over Golden Monkey, as of press time, New Financial Observer had not received an official reply from COFCO Group. However, Hershey's response this time is quite meaningful.

"In accordance with company policy, we do not respond to rumors or speculation, nor will we disclose whether we will engage in mergers and acquisitions. We remain optimistic about China's market potential and Hershey's growth opportunities in China," Hershey officially stated in its reply to New Financial Observer.

In contrast, regarding Zhao Qisan's buyback of Golden Monkey last July, Hershey's reply to New Financial Observer clearly stated its position, using words like "false statements" and "without any basis."

As the saying goes, "live long and see all." It seems that if Golden Monkey is to be "married" again, the "beloved" will eventually surface. However, "the human and experiential wealth that Golden Monkey has accumulated over the years may be abandoned again by a piece of paper," the aforementioned source said.

Source: New Financial Observer -END-