Family-owned Ferrero International is offering 145p a share in cash for the 104-year-old Derbyshire-based business – a 43 per cent premium to the UK firm’s closing price on Friday. Thorntons’ management said it backed the deal, which is equivalent to about £112 million.
Shares in the group have lost around 40 per cent of their value since March 2014, but jumped yesterday to close at 145p, matching the offer price.
City analysts said Thorntons was a good fit for Ferrero, which has strong, premium brands but no big retail platform to showcase them – something that the Thorntons store network would provide.
“It’s good timing,” noted N+1 Singer Capital Markets analyst Matthew McEachran of the offer, adding it appeared to be pitched at a fair value for investors.
Thorntons was established by Joseph William Thornton in 1911, and has 242 of its own stores and cafes in the UK and Ireland and a franchise estate of 158 outlets. It employs some 3,500 staff, and around 3 per cent of its revenues are currently generated overseas.
Ferrero, which traces its roots back to 1946 and also owns Nutella spread, said it would review Thorntons to identify potential cost savings, but ruled out shutting the company’s main Alfreton plant where some 1,500 people are currently employed. It will also retain the Thorntons brand.
Chief executive Giovanni Ferrero said: “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.
“We have long admired Thortons and what they have achieved in the UK as demonstrated by their tremendous customer loyalty, and we look forward to working with their experienced team.”
Thorntons chairman Paul Wilkinson added: “Ferrero is offering our shareholders an attractive premium to the average price of Thorntons’ shares over the last three months.
“Although the prospects for Thorntons as an independent company remain strong as the company embarks on the next phase of its strategy, the board of Thorntons also recognises the potential benefits to the brand and the business, including employees and all stakeholders from combining with the Ferrero Group.
“Ferrero is a successful global confectionery business with a strong family heritage and as such represents a good cultural fit for Thorntons.”
Thorntons has felt the heat in recent years from newer and more upmarket brands such as Green & Black’s, forcing it to close some of its own stores. However, it has had some success increasing the volume of branded products sold through third parties.
The two firms have not publicly set a date for the completion of the takeover sale, which is subject to regulatory review. On completion, Thorntons will be delisted from the London Stock Exchange, where it has traded since 1988.