Hershey Co, famous for the Kisses, Reese and its namesake chocolate bars, has expanded in China and purchased 80 per cent of the local iconic Shanghai Golden Monkey Food Joint Stock Co Ltd for $584 million.

The agreement is expected to be completed in the second quarter of 2014, subject to China regulatory and SGM shareholder approval.

Hershey Co, famous for the Kisses, Reese and its namesake chocolate bars, has expanded in China and purchased 80 per cent of the local iconic Shanghai Golden Monkey Food Joint Stock Co Ltd for $584 million. (http://www.hersheys.com/kisses.aspx#/Hersheys%27s-cookies-%27n%27-creme-candies-are-frightfully-delicious)

The U.S. food producer will acquire the majority controllership of Shanghai Golden Monkey's shares in mid-2014. The remainder will be purchased by the Dutch subsidiary a year later, Hershey said.

"The strength of [Shanghai Golden Monkey's] confectionery portfolio and overall distribution capabilities, especially within the traditional trade, is an opportunity for us to leverage scale to make the iconic brands of Hershey and SGM even more powerful," John Bilbrey, Hershey CEO, said in a statement.

"Additionally, SGM's focus on protein-based products and snacking is on-trend with Hershey's consumer-centric marketplace insights."

The acquisition is so far the biggest by Hershey, Standard & Poor's Capital IQ said, noting its previous deals were valued at only less than $200 million.

"Shanghai Golden Monkey is the type of business we've been focused on for potential M&A," Humberto P. Alfonso, president of Hershey's international division, was quoted by DealBook NYTimes.

Established in 1996, Shanghai Golden Monkey employs more than 5,000 people. It has an annual sales of at least $225 million. According to Euromonitor, it is the ninth largest confectionery and sixth largest chocolate company in China.

The deal not only opens doors of opportunities for Hershey to expand in China, it will also push forward by more than double its revenue in one jump.

David Driscoll, Citi analyst, believed it's a win-win situation for Hershey.

"We believe the deal fits in nicely with Hershey's strategy to push its exposure from emerging markets to ~25 per cent of sales by 2017, up from its current 11 per cent EM exposure," Mr Driscoll said in a new note.

"Moreover, SGM is a profitable business, which is growing at double digits, and aligns well with Hershey's core competency within the chocolate and non-chocolate confection markets. Thus, with increased scale within China, we believe Hershey will likely be presented with good opportunities for revenue and cost synergies over time, as the Golden Monkey operations are integrated with Hershey's legacy Chinese business."