Hershey kisses Mauna Loa
By Sean Hao
Advertiser Staff Writer
America's top candy maker yesterday said it would acquire Mauna Loa Macadamia Nut Corp. for $130 million in a deal that could take gourmet macadamia snacks mainstream.
Hershey Foods Corp. said the acquisition of Hawai'i's largest macadamia nut processor would allow the candy company to add macadamia nuts, nut-based confections and cookies to its line of products. With the backing of Hershey's — maker of popular products such as Hershey's Kisses — exposure of macadamia nut products could soar.
Under terms of the deal, which is expected to close by year's end, Hershey, Pa.-based Hershey will will buy Mauna Loa from The Shansby Group for $112.4 million and the assumption of $17.6 million in debt.
Judy Hogarth, a Hershey spokeswoman, said it was too early to speculate on how the transaction will affect the Hilo, Hawai'i-based company's 400 employees.
"No decisions have been made," she said. "We think they will be a good fit for us."
For Mauna Loa competitor MacFarms of Hawaii — the second-largest nut processor in the state — Hershey's announcement was a surprise. Just last month, Mauna Loa scrapped plans to acquire MacFarms over objections by competitors.
"I'm shocked, considering that it's only been a month or so that the deal to acquire us bit the dust," said Hilary Brown, president of MacFarms. MacFarms employs more than 50 full-time workers and about 75 seasonal employees, and had reported sales of $27 million in 2002.
In contrast Mauna Loa has annual sales of about $80 million, according to Hershey. Mauna Loa would join a $4 billion company with 13,000 employees worldwide, should Hershey's acquisition go through.
"It's certainly a bigger competitor," Brown said.
The Big Island is the second-largest producer of mac nuts in the world. There are about 650 nut growers on the island producing about 60 million pounds of nuts a year — a crop worth about $32 million for local farmers.
Mauna Loa, which has about a 40 percent share of the macadamia market, buys unprocessed nuts from growers but does not have its own orchards.
About two-thirds of Mauna Loa's mac nuts come from Hilo-based ML Macadamia Orchards LP, said Dennis Simonis, ML Macadamia's president and chief executive.
"Time will tell whether this is a great thing or a not-so-good thing, " Simonis said. "It's always a trade-off.
"When you become ordinary, you lose the premium price you get from a premium product. It will be interesting to see how they market macadamia nuts."
The acquisition of Mauna Loa from private equity firm The Shansby Group is expected to boost Hershey's earnings within a year.
Shares of Hershey's rose 80 cents to close at $52.27 on the New York Stock Exchange yesterday. News of the Mauna Loa purchase was released after markets closed.
Bloomberg News contributed to this report. Reach Sean Hao at 525-8093 or shao@honoluluadvertiser.com.
