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Thorntons has been bought by Ferrero Rocher maker for £112 million Thorntons has been bought by Ferrero Rocher maker for £112 million
(about 9 hours later)
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. The new owner of Thorntons could use the struggling retailer’s chain of 242 stores to start selling its own chocolate direct to the British public for the first time.
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, the Italian chocolatier behind Kinder Eggs, Nutella and Ferrero Rocher, has only ever sold chocolates through supermarkets in the UK, but with a £112m bid almost certain to be accepted by Thorntons’ shareholders, that could change.
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. The deal for the business was unveiled on Monday, with Ferrero offering 145p a share for Thorntons – a 43 per cent premium on the share price on Friday evening – and was accepted by the largest shareholder and the company’s board. Shares in Thorntons jumped 43.5p to 145p on the news.
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. Ferrero now has a 29.9 per cent stake in Thorntons. However the good news for investors, who have suffered years of underperformance and profit warnings, was not shared with the company’s 3,500 employees, as the new owner failed to reveal whether the stores would close. Bosses did say the company intends to keep the Thorntons factory in Alfreton, Derbyshire, open, in an attempt to ward off any comparisons with Kraft’s takeover of Cadbury’s, with its job losses and factory closures.
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. Lamine Lahouasnia, head of packaged food research at Euromonitor International, suggested that the stores could be safe if Ferrero use the sites to its advantage.
MEGA JOB LOSSES AHOY: Ferrero gobbles up #Thorntons a sign of good taste from The Ambassador's Party https://t.co/fpbBK9avWW via @sharethis “What Ferrero has historically lacked is a retail platform suitable for some of its more premium offerings,” he said. “The Thorntons’ store network will provide the company with the opportunity to add a more directly experiential approach to its strategy.
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. “If all goes well with absorption of Thorntons stores in the UK, we could see similar happenings around the world in years to come.”
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. The new Thorntons owners will meet the current management to conduct a review of the business, to see whether to continue with the ongoing programme of shutting stores and focusing more heavily on sales to supermarkets through its FMCG division.
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. The plan suffered a setback at Christmas when two of its biggest customers, Tesco and Morrisons, drastically cut orders from Thorntons, leading to a profit warning. The chief executive, Jonathan Hart, stepped aside in May.
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. 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 past year.”
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.  Ferrero could be forced to reveal more details of its plans for the future of the business, after the UK Takeover Panel tightened up rules on foreign takeovers following Cadbury’s sale to Kraft.
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. At the time, Kraft said it would keep Cadbury’s Somerdale factory open, but changed its mind a week later.
"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." Ferrero said it also wants to keep the Thorntons brand and has “great respect” for its history and heritage.