Thorntons on the shelf
prompting the company to look at the wider possibility of a sale.
Shares in Thorntons, the British chocolate maker and retailer, rose sharply yesterday as the company confirmed that it had been approached by a financial investor interested in taking the company private.
While the company stressed that negotiations with the unnamed private equity house were at a very early stage, and that there was no guarantee of a deal being reached, it confirmed that it was evaluating "potential sources of finance to enable the company to be taken private".
The company's shares rose by 20 per cent immediately following the announcement, ending the day around 13 per cent higher.
Thorntons management has been working hard to resurrect the company's fortunes after a difficult few years in the late 1990s when competition from other specialist chocolate groups - and the continued rise of the multiple food retailers - began to take a toll.
Since then, a number of initiatives have been undertaken to improve the company's performance. These include the highly successful roll out of an ever-widening range of Thorntons branded products sold through the multiples, as well as the introduction of a Thorntons Café format, designed to benefit from the trend towards US-style coffee shops in the UK.
But the hot weather this summer was not conducive to selling chocolate, forcing the company to issue a profit warning in July after profits in the year to June fell nearly 10 per cent. Even the company's move towards increased sales of soft drinks and ice cream - two products which sold well during the heat wave - was not sufficient to offset the poor sales of chocolate during the period.
Despite this temporary setback, Thorntons' management seems to be moving in the right direction, although it is still hampered by the fixed costs of a large number of retail outlets. Nonetheless, the Financial Times reports that a successful bidder is expected to have to pay around 180 pence per share for the company, a significant premium even to the inflated share price of 155p following yesterday's announcement.
