June 23, 2015
In a rare move, designed to further its expansion into Europe’s biggest confectionary market, Italian global chocolate giant, Ferrero, has agreed to acquire UK chocolate maker, Thorntons for £112 million (US$178 million).
This is the first deal for the family-owned Ferrero International since the death earlier this year of Michele Ferrero, the head of the Ferrero family, who focused on building the family business and historically turned away from acquisitions. Mr. Ferrero’s single acquisition was a hazelnut factory in Turkey in 2014 – purchased in order to secure a stable source of ingredient supplies for the company’s famous Nutella, after having refused to pursue the idea of offering a bid for Cadbury in 2009, which was ultimately acquired by Mondelez.
Ferrero is paying a cash price of 145 pence per share for Thorntons, representing a 43% premium to the company’s closing price on Friday, June 18. Analysts state that the timing of the deal is good, as Thorntons has been pressured in recent years by the rising popularity of newer chocolate brands such as Green & Black’s and Hotel Chocolate. In addition, the company has lately been driven to close some of its retail stores, and was placed in the position of having to issue a profit warning in December, leading to the resignation of its chief executive, Jonathan Hart.
The integration of the two companies is also expected to prove beneficial for Ferrero, which has a strong global brand, but doesn’t have its own retail platform – this acquisition will avail the company of a retail network in the UK – the world’s third largest confectionary market behind China and the U.S.
After buying stakes from shareholders including top shareholder, Crystal Amber, Ferrero states it will control a 34% stake in Thorntons, and states that it will retain the Thorntons brand, and that it plans to keep the company’s Alfreton factory in operation in central England.
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