The Italian company known for Ferrero Rocher chocolates, Nutella spread, and Tic Tac has agreed to buy British chocolate retailer Thorntons for $177 million, according to a report by Reuters.
This will be the first deal since the family-owned Ferrero Int’l experienced the death of patriarch Michele Ferrero earlier this year.
“Our business was founded nearly 60 years ago out of a passion for chocolate and with a commitment to quality. We delivered our best-ever result in the UK in 2014, giving us confidence that now is the right time to broaden our roots in this important market,” says Giovanni Ferrero, ceo, Ferrero.
The deal includes a 43 percent premium to 104-year-old Thornton’s closing stock price. Thorntons, which has experienced a 40 percent drop in shares since March 2014, backs the decision.
“Ferrero is offering our shareholders an attractive premium to the average price of Thorntons’ shares over the last three months,” says Paul Wilkinson, chairman, Thorntons. “Ferrero is a successful global confectionery business with a strong family heritage and as such represents a good cultural fit for Thorntons.”
The rise of newer, upmarket brands such as Green & Black’s and Hotel Chocolat have left Thorntons struggling. Shifting the sales of its chocolates through third parties while closing some of its own stores has helped. But after the profit warning in December and the resignation of Jonathan Hart, former chief executive, action needed to be taken.
Analysts say Thorntons is a good fit for Ferrero, which has strong 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," says Lamine Lahouasnia, Euromonitor Int’l. "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 Reuters, Ferrero will review Thorntons to identify potential cost savings, but has no plans to close the Alfreton factory in central England. It will also keep the Thorntons brand name.
“This transaction 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,” says Ferrero.
