Hershey Mexico, a subsidiary of Hershey Foods Corporation and one of the leading companies manufacturing and selling chocolate, confectionery and flavored milk products in Mexico, announced it has entered into an agreement to acquire Grupo Lorena, one of Mexico's top confectionery companies. Grupo Lorena, which had sales of more than $30 million in 2003, is a leader in the spicy candy market in Mexico with its Pelon Pelo Rico brand.

"Grupo Lorena's solid brands in key consumer segments will strengthen our leadership position in the Mexican market," said Juan-Carlos Zayas, director of Marketing, Hershey Mexico. "This portfolio will broaden our offerings for Mexican consumers, especially as its strength in the youth market complements our established success in the adult segment. Its Pelon Pelo Rico brand is a great entry to the popular spicy candy segment for Hershey Mexico. Equally important, Grupo Lorena's commitment to product quality and innovation is a perfect fit with Hershey's reputation for manufacturing products that meet consumer expectations for great taste and top quality."

"Grupo Lorena is a great addition to Hershey Foods' portfolio of excellent brands," said Richard H. Lenny, chairman, president and chief executive officer, Hershey Foods Corporation. "It significantly increases our existing business in Mexico and supports our strategy of profitably building scale in the key North American market. Lorena also will deliver expanded retail channel and customer growth opportunities for Hershey, both in Mexico and the United States. We look forward to building Grupo Lorena's brands with the Hispanic consumer and leveraging its capabilities to introduce innovative Hershey products to the high-growth Hispanic segment."

As part of Hershey Foods' strategy to tap into the fast-growing U.S. Latino market, the company recently announced a multi-year partnership with Mexican-born Thalia Sodi, the Latin singer and actress popular with millions of fans around the world. The partnership includes sponsorship of Thalia's 2004 U.S. tour, a Spanish-language advertising campaign, consumer and retail promotions, and a new, co-branded Thalia line of Hershey products designed to appeal to the Latino community.

"Hershey, with its longstanding commitment to manufacturing top-quality and great-tasting products, is a perfect match for Grupo Lorena," said Fernando Topete, president, Grupo Lorena. "Whether in Mexico, the U.S. or Latin America, our consumers will be able to enjoy all their favorite Lorena products with complete assurance that they meet the highest standards for quality."

The acquisition is expected to be completed during the fourth quarter of 2004 and is subject to the customary closing conditions and regulatory approval. The acquisition is expected to be slightly accretive in the first 12 months. Terms of the agreement were not disclosed.