Hotel Chocolat, a British chocolate specialist, has accepted a takeover proposal from Mars Inc, amounting to £534 million ($662 million). This move is aimed at facilitating international growth for the chocolatier, with the founders set to gain a substantial profit.
Following the announcement of the deal, Hotel Chocolat’s shares experienced a significant surge in early trading, reaching 364 pence, nearing the recommended cash offer price of 375 pence per share endorsed by the company’s board. This offer represents a remarkable 170% premium over Hotel Chocolat’s closing price on November 8, 2023
“We view this bid as exceptionally strong,” commented analysts from Peel Hunt, expressing the belief that a counterbid is unlikely. Hotel Chocolat’s CEO Angus Thirlwell and co-founder Peter Harris, who collectively own 27% of the company’s equity according to LSEG data, have both indicated their acceptance of the offer. This acceptance translates to approximately £144 million each for Thirlwell and Harris.
History
Established two decades ago, Hotel Chocolat aimed to bring excitement to the world of chocolate, successfully introducing ethical and affordable luxury to the British high street through over 130 stores. However, the journey has had its challenges. The offered price of 375 pence aligns with the share trading value in April 2022 and is considerably lower than the peak of 540 pence in late 2021. The company faced setbacks from unsuccessful expansion efforts, incurring significant costs, coupled with the impact of a cost of living crisis on UK sales.
Efforts to extend the reach of it’s products, such as the trillionaire shortbread and champagne chocolate truffles, beyond the UK have encountered difficulties. Thirlwell acknowledged that, as a small independent player, he has taken the company as far as possible, leading to the decision to explore new horizons with the support of a larger entity.
He intends to lead the company for the next five years within the framework of Mars, a family-owned business known for iconic brands like M&M’s, Snickers, and Skittles.
Although the brand has been making strides in Japan and the United States, he acknowledged the impending need to establish manufacturing facilities and infrastructure in these markets. This endeavor demands significant capital and resources.
In an interview, he explained that collaborating with Mars presents opportunities to expedite and simplify these expansions. Despite the contrasting profiles of Hotel Chocolat, with its luxury hotel on a cacao estate in Saint Lucia, chocolate cookbooks, and a focus on cocoa over sugar, he expressed confidence in the cultural compatibility. He emphasized shared commitments to sustainability and quality.
He clarified that the partnership is centered on growth rather than cost-cutting, assuring that all 3,000 staff members are expected to be retained.
The completion of the deal is anticipated by the end of January.
Source: Reuters
Mars acquisition of Hotel Chocolate
The acquisition is seen as a strategic move by Mars to expand its premium chocolate portfolio and grow its international presence. Hotel Chocolat is a well-respected brand in the UK with a growing international business. Mars has a strong track record of acquiring and growing brands, and it is expected to help Hotel Chocolat expand its reach into new markets.
The deal has been welcomed by investors, with it’s share price soaring by over 50% on the day of the announcement. Analysts believe that the acquisition is a good fit for both companies, and they expect Hotel Chocolat to benefit from Mars’s global resources and expertise.
Here are some of the key details of the deal:
- Price: £534 million ($662 million)
- Payment: Cash
- Expected closing: First half of 2024
- It will operate as a standalone business under Mars ownership
Overall, the acquisition of Hotel Chocolat by Mars is a significant event in the confectionery industry. It is expected to have a positive impact on both companies and to create a stronger global player in the premium chocolate market.
Hotel Chocolat
It is a British chocolatier that was founded in 2000 by Angus Thirlwell and Peter Harris. The company is known for its high-quality chocolate, which is made from cacao beans that are grown on its own estate in Saint Lucia. Hotel Chocolat also has a wide range of other chocolate products, such as truffles, pralines, and drinking chocolate.
Hotel Chocolat has over 120 shops in the UK, as well as shops in Japan, Dubai, and the United States. The company also sells its products online and through department stores.
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Hotel Chocolat is committed to ethical and sustainable practices. The company sources its cacao beans from fair trade suppliers and uses recycled and recyclable packaging. Hotel Chocolat is also a founding member of the Cocoa Sustainability Initiative.
Here are some of Hotel Chocolat’s most popular products:
Hotel Chocolat is a beloved British brand that is known for its high-quality chocolate and its commitment to ethical and sustainable practices. The company is a popular destination for chocolate lovers of all ages.
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