Ferrero agrees to acquire UK’s Thorntons
THE ITALIAN firm behind Ferrero Rocher chocolates and Nutella spread has agreed to buy British chocolate retailer Thorntons for £112 million (R2.1 billion), striking a rare deal to expand in Europe’s biggest confectionery market.
The deal is the first by family-owned Ferrero International since the death earlier this year of patriarch Michele Ferrero, who was Italy’s wealthiest man and largely shied away from acquisitions as he built up a business that also spans Kinder Surprise eggs and Tic Tac mints.
Ferrero said yesterday it would pay 145 pence a share in cash for the 104-year-old Thorntons, a 43 percent premium to the British firm’s closing stock price on Friday. Thorntons’ management said it backed the deal.
Shares gain
Thorntons has been hit in recent years by the rise of newer and upmarket brands such as Green & Black’s and Hotel Chocolate.
It has had some success by shifting to sell more of its chocolates through third parties while closing some of its own stores, but after a profit warning in December its chief executive of four years, Jonathan Hart, is stepping down.
“It’s good timing,” said N+1 Singer Capital Markets analyst Matthew McEachran of Ferrero’s offer, adding it appeared to be pitched at a fair value for shareholders.
Thorntons shares, which had lost about 40 percent since March last year, rose to touch the offer price.
Analysts said Thorntons was a good fit for Ferrero, which had strong, premium brands but no retail platform to showcase them.
“The Thorntons store network will provide the company the opportunity to add a more directly experiential approach to its strategy,” said Euromonitor International’s Lamine Lahouasnia. “If all goes well with absorption of Thorntons stores in the UK, we could see similar happenings around the world in years to come.”
According to Euromonitor, Britain is the world's third-biggest confectionery market behind China and the US. Ferrero said it would review Thorntons to identify potential cost savings. – Reuters