Ferrero, maker of Ferrero Rocher, has agreed to buy Thorntons for £112 million, bringing to an end one of the toughest eras in the chocolatier’s history.
On the verge of bankruptcy just a few years ago and plagued by profit warnings, Thornton’s shares jumped 43 per cent today to match the 145p-a-share bid from Ferrero, which values the 104-year-old business at £114 million.
Ferrero, which owns Ferrero Rocher, Nutella and Kinder Egg, snapped up a 29.9 per cent stake in Thorntons, buying out biggest shareholder Crystal Amber and management, and is on course to buy the remaining shares – at a 43% premium on the Friday’s closing price.
However, 3,500 jobs were left at risk as Ferrero declined to reveal the future of the 242 stores and 158 franchises in the UK and Ireland. The company had been slowly shutting stores over the past few years, aiming to have a portfolio of around 200.
Bosses did say they intend to keep open the Thorntons’ factory in Alfreton, Derbyshire, in an attempt to ward off any comparisons with Kraft’s takeover of Cadbury’s which saw heavy job losses and factory closures, despite reassurances that the US business would not be risking UK jobs.
At the time in 2010 Kraft said it would keep open Cadbury’s Somerdale factory, only to change its mind a week later. It led to widescale changed by the Takeover panel, forcing foreign companies to be more transparent over their plans for British businesses, including areas like job cuts.
The new Thorntons owners will meet with current management to conduct a complete review of the Thorntons business, with some suggestions being made privately that Ferrero could use the store estate to sell its brands direct to the public rather than via supermarkets and other retailers.
It is not known whether Ferrero will continue following the current strategy of shutting stores and pushing harder into its FMCG business, selling in greater numbers to supermarkets.
But the new owners will be keen to address recent problems, including a Christmas profit warning, after its biggest customer Tesco pulling Thorntons from its shelves and others reduced their orders.
Shares never recovered from its pre-profit warning high of 118p, leading to chief executive Jonathan Hart leaving the business. His final day in charge is this Friday, having taken the share price to as high as 167p in March last year.
Analysts generally welcomed the deal. Retail analyst Matthew McEachran at N+1 Singer said: “This will probably be well received and would be a satisfactory end to what otherwise has been a disappointing stock over the last year.
“Compared against a long term view of where value could go this isn’t an especially rich offer. But investors have been disappointed recently with progress in FMCG in particular not meeting expectations and forecasts have been impacted.”
By Simon Neville