Chocolate Makers Unite as Ferrero to Buy Britain’s ThorntonsPaul Jarvis
Ferrero International agreed to acquire Thorntons Plc for 112 million pounds ($178 million) in a transaction that brings the 104-year-old British chocolate maker under the same roof as Nutella hazelnut spread.
The closely held Italian company will pay 145 pence a share, or 43 percent more than the U.K. confectioner’s last closing price in London, it said in a statement. Thorntons’ shares rose to as high as 145.25 pence Monday.
The deal will seek to build on the heritages of companies that are linked closely to chocolate. Although formed three decades later than Thorntons in 1946, Ferrero has grown into one of the world’s biggest confectionery companies with annual sales of about 8.4 billion euros ($9.5 billion) from brands like Tic Tac and Ferrero Rocher. Thorntons, which opened its first store in 1911, is little known outside the U.K. and had revenue of 222 million pounds ($352 million) last year.
For Ferrero, the transaction provides an opportunity to expand in a country it entered in 1966 and where it had record results last year. Adding the company’s 5.4 percent share of the local chocolate confectionery market to Thorntons’ 2.9 percent will establish a clear industry No. 4 behind leaders Mondelez International, Mars Co. and Nestle SA, according to Nielsen data.
“We delivered our best-ever results in the U.K. in 2014, giving us confidence that now is the right time to broaden our roots in this important market,” Giovanni Ferrero, chief executive officer of Ferrero, said in a statement.
In Thorntons, the Italian confectioner is taking on a business with a checkered recent past. Sales have barely grown since 2009 as the company has struggled with declining orders from the main supermarkets. Its customers include Tesco Plc and J Sainsbury Plc, which have been losing customers as more shoppers switch to German discounters Aldi and Lidl.
Thorntons also has been seeking new leadership, with Chief Executive Officer Jonathan Hart due to step down this week.
Ferrero said it plans to grow the Thorntons business, which currently includes 242 of its own outlets in the U.K. and Ireland, as well as 158 franchise stores. Part of that will include a strategic review of the British company, that will be undertaken after the takeover is completed. Thorntons’ main manufacturing base in Alfreton, central England, where 1,500 of its 3,500 workforce are located, will be retained.
To start the acquisition process, Ferrero said it has acquired a 29.9 percent stake in Thorntons, including the entire holdings of investment company Crystal Amber and former Budgens Plc CEO John von Spreckelsen.
Ferrero said it is holding talks with the European Commission over potential antitrust concerns, “and is optimistic of a positive outcome.”
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