The share price of Hotel Chocolat Group PLC (GB:HOTC) skyrocketed after the company endorsed an acquisition bid from the U.S.-based food company Mars Inc. The offer price of 375p per share valued the company at £534 million and represented a significant increase of 170% on its closing price on Wednesday.
The co-founders of Hotel Chocolat are set to receive £144 million each following their decision to sell the British business to Mars. One of the founders and the current CEO, Angus Thirlwell, intends to reinvest approximately 80% of the cash back into the company, which he will continue to oversee.
Following the announcement, the shares recorded a huge growth of 160%, reaching above 360p on Thursday.
Hotel Chocolat, which was founded 20 years ago, manufactures chocolate and cocoa-related products. The company is known for its affordable luxury chocolates, truffles, and pralines.
The Deal Rationale
The deal marks the most recent instance of a UK-listed company being acquired by foreign investors. Hotel Chocolat considers the terms of the deal to be “fair and reasonable” and believes that the acquisition would enable its brand to expand its reach. The company further highlighted the potential benefits of Mars’s global supply chain and commercial relationships in its business expansion.
On the other hand, Mars is looking to enhance its presence in international markets through this deal. Mars is among the leading food companies in the world and owns brands like Pedigree, M&M’s, Snickers, Orbit, Skittles, etc. in its portfolio.
The acquisition comes in the wake of Hotel Chocolat’s financial challenges this year, characterized by a loss. The company experienced a financial setback in FY23 as it transitioned from a pre-tax profit of £21.7 million to a loss of £800,000. The revenues were also down by 10% to £204.5 million compared to the previous year. The loss was mainly due to high inflationary pressures, reduced consumer demand, and unsuccessful international expansion.
