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Hershey high on chocolate acquisitions

By Lorraine Heller , 16-Aug-2005

US confectionery company Hershey is marching along the acquisition trail, announcing this week that it has bought another premium chocolate firm, Californian-based Joseph Schmidt Confections.

The acquisition was made by the Artisan Confections Company, a newly formed Hershey subsidiary, and comes less than a month after the company announced its plans to buy dark chocolate specialist Scharffen Berger.

"The Scharffen Berger and Joseph Schmidt acquisitions are great strategic opportunities for Hershey to capitalize on the high-growth, on-trend premium chocolate segment," said Hershey chief executive officer Richard Lenny in a statement.

With its move into the $1.7bn premium chocolate segment, Hershey also looks to benefit from an anticipated boost in demand for dark chocolate, which is said to carry antioxidant properties.

New studies are increasingly advocating the health benefits of cocoa flavonols, found in dark chocolate. These appear to increase synthesis of nitric oxide by blood vessels, increasing blood flow and benefiting heart and brain health. However, further research is required to determine the specific mechanisms for these actions.

Scharffen Berger, whose acquisition by Hershey has now been completed, claims to be one of the fastest growing premium dark chocolate companies in the US, known for the high-cocoa content of its chocolate and baking products.

Joseph Schmidt specializes in handcrafted chocolate gifts.

Hershey announced that the combined purchase price for Scharffen Berger and Joseph Schmidt will be between $46.6m and $61.1m, with the final amount reflecting actual sales growth through 2007.

The two companies, which have combined annual sales of around $25m, have "immense growth potential," according to Lenny, and will contribute to "further extending Hershy's leadership position in the US confectionery market."

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