Struggling chocolatier Thorntons (THT) becomes the latest UK company to fall into the clutches of an overseas buyer after recommending a £112 million takeover bid from Ferrero. This is good news for shareholders in the beloved British chocolate brand, established by Joseph William Thornton back in 1911, who have been plagued by consistently patchy financial performances over the years.
Italian confectioner Ferrero is offering 145p per share in cash, an attractive 72.3% premium to Thorntons' average closing price over the past six months, and a 43% premium to Friday's undisturbed share price. With the shares soaring more than 40% to 144p today, this looks an increasingly done deal.
The bid comes at a difficult time for the Derbyshire-based chocolate maker. Under CEO Jonathan Hart, Thorntons has undergone a positive transformation from a chocolate retailer to a fast moving consumer goods (FMCG) provider, yet the shares have been a weak market year-to-date. Sluggish sales to supermarkets have triggered a return to irksome profit warnings, while Hart announced his resignation last month and departs following the end of the financial year (27 Jun).
Ferrero now owns 29.9% of Thorntons, having mopped up the entire holdings of directors including Hart and chairman Paul Wilkinson, as well as those of activist investment fund Crystal Amber (CRS:AIM) and former Thorntons chairman John von Spreckelsen.
The maker of Nutella, Kinder Eggs and luxuriant Ferrero Rocher chocolates is the globe's fourth biggest confectionery brand. A leading player in Italy, France and Germany, it has operated in the UK since the 1960s, though Thorntons will help it expand its presence in the strategically-important UK market.
As CEO Giovanni Ferrero explains: 'We delivered our best ever results in the UK in 2014, giving us confidence that now is the right time to broaden our roots in this important market. This transactions brings together two highly complementary businesses, but more importantly it unites two companies that share the same passion for growing brands, and a proud heritage, drive and culture built upon their family foundations.'
Ferrero's bid for Thorntons will be looked into by the European Commission under EU merger regulations, though the Italian food firm is 'optimistic of a positive outcome.' Once Thorntons is in its grasp, Ferrero will conduct a strategic and operational review, though it has assured the board it will maintain the brand and retain Thorntons' Alfreton factory.