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Multichannel chocolatier Thorntons looks set to be bought by Ferrero

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Multichannel retailer and IRUK 500 company Thorntons looks set to be bought by Ferrero International, maker of Ferrero Rocher, Kinder chocolate and Nutella.

Luxembourg-based Ferrero’s 145p per share offer to buy the chocolate manufacturer and retailer values the business at £111.9m, and is recommended by the board. The offer is made through a Ferrero subsidiary, Ferholding UK, which has already secured 29.90% of shares in the business, buying them from existing shareholders including Thorntons chief executive Jonathan Hart and chairman Paul Wilkinson.

Wilkinson said the offer came at “an attractive premium” to the average Thorntons share price over the last three months. Thorntons is a Top150 company in the UK multichannel and ecommerce industry according to Internet Retailing ranking IRUK 500. It is also ranked as a Model business in The Customer dimension.

Wilkinson said that while Thorntons’ prospects remained strong as an independent company, its board also recognised the potential benefits of its acquisition.

“Ferrero is a successful global confectionery business with a strong family heritage and as such represents a good cultural fit for Thorntons,” he said.

Giovanni Ferrero, chief executive of Ferrero, said: “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 results in the UK in 2014, giving us confidence that now is the right time to broaden our results in this important market.”

He said the transaction brought together two “highly complementary businesses” built on family foundations.

“We have long admired Thorntons 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.”

The deal comes after a period of uncertainty for Thorntons at a time when it has been intent on a multichannel strategy. Sales were up by 0.5% to £222.4m in the year to June 28, and pre-tax profits of £7.4m were 60% up on the £4.7m achieved the previous year.

But since then the company has reported falling sales in a series of trading statements and profits warnings, including one that came on December 23 warning that its Christmas performance would fall short after disruption in its warehouse and a fall in orders from one major grocer. In the half-year to January 10, sales fell by 8% £128.2m from £139.7m at the same time last year, while pre-tax profits of £6.4m were 11% behind the £7.2m reported last time.

Online sales, however, were healthy, with direct sales up by 11.4% to £4.5m in the half-year. At the time, the company said: “Despite [online] being a small part of our overall sales mix, during the period under review we have had success in delivering a more profitable balance between sales and marketing investment and we continue to focus on this.”

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