The luxury chocolatier was established as an online retailer in 2004 and enjoyed a meteoric rise with outlets on high streets across the UK before an ambitious expansion plan attempted to crack the US and Japanese markets.
Blaming inflationary pressure, weak consumer demand for ‘luxury’ chocolate, and the cost of restructuring efforts after the failed international expansion plans, the company lost £800,000 in July, falling from a pre-tax profit of £21.7 million in the previous year.
Hotel Chocolat said in a statement they considered the terms of the deal “to be fair and reasonable”, adding Mars’s global supply chain and commercial relationships would help the company get the expansion of its business abroad back on track.
Mars, which employs approximately 10,000 people in the UK, says the deal will bring a “much-loved brand into its portfolio” and deepen consumer relationships. It will pay 375p per Hotel Chocolat share, a substantial 170% premium to Wednesday night’s closing price of 139p.
“We know our brand resonates with consumers overseas, but operational supply chain challenges have held us back,” said Angus Thirlwell, Hotel Chocolat’s founder and chief executive. “By partnering with Mars, we can grow our international presence much more quickly using their skills, expertise, and capabilities.”
As reported by ConfectioneryNews, Hotel Chocolat announced the closure of its US stores in 2022 after heavy losses and wrote off its investment in a Japanese joint venture.
“Over the last year or two it has become clear to the Hotel Chocolat directors that achieving this potential will require substantial investment and time . . .” the company said in a stock market update on Thursday.
For Mars, the acquisition allows the confectionery giant to move into the higher-value premium chocolate category. It emulates Nestlé’s takeover of Brazilian premium chocolate maker Grupo CRM earlier this year.