28 Jun 2015 Ferrero increasing empire, acquires UK chocolate maker Thorntons
Italian chocolate group Ferrero has agreed to buy smaller UK rival, Thorntons, in the latest cross-border deal by the once acquisition-shy maker of Kinder candy and Nutella spread.
Ferrero, closely held by the family of the same name, has agreed to pay £111.9-million ($177.7-million) in cash, equivalent to a 145 pence a share, for Thorntons. The Italian company has set a goal of doubling its $9-billion in yearly revenue by early next decade.
“This transaction brings together two highly complementary businesses, but more important, it unites two companies that share the same passion for growing brands and a proud heritage, drive and culture built upon their family foundations,” said Ferrero Chief Executive Giovanni Ferrero.
The deal underscores Ferrero’s recent shift in strategy after becoming one of the world’s biggest chocolate companies on the strength of a handful of products, including Kinder, Nutella, Ferrero Rocher chocolates and Tic Tac mints.
Ferrero, who became the group’s CEO in 2011 when his brother Pietro died, has previously said the company needs “to explore new frontiers.” Last July Ferrero acquired family-owned Oltan Group of Turkey, a big hazelnut producer, for an undisclosed sum.
Ferrero, founded in the 1940s, has had operations in the UK since 1966 and hopes to further expand its presence via the acquisition, the company said. It said it plans to begin a strategic review of Thorntons to identify synergies, after the merger.
Thorntons, which has nearly 4,000 employees, is one of the UK’s last independent industrially scaled chocolate makers. Swiss foods giant Nestlé SA owns Rowntree and US rival Mondelez International owns Cadbury.
Thorntons traces its roots back to 1911 when a traveling confectioner Joseph William Thornton set up a chocolate shop in the northern English city of Sheffield, serving chocolate and cakes as well as Curiously Strong Mints. The Thornton family ran the company, listed in 1988, until the mid-1990s.
Recently, under CEO Jonathan Hart, Thorntons changed its strategy, focusing more on selling chocolates and candy to supermarkets than relying on its own stores. Hart announced his resignation in May after the company posted disappointing quarterly sales.
The UK chocolate maker had revenue of £222.4 million for its fiscal year ended June 28, 2014. It currently operates 242 own stores and 158 franchise outlets.
“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,” Thorntons Chairman Paul Wilkinson said.
Source: WSJ