Hotel Chocolat’s sweet £534m Mars deal leaves London market on a sugar high
Hotel Chocolat is the latest in a long line of British companies to delist from the London market, after sinking its teeth into a sweet £534m deal to be bought out by the US giant Mars.
The luxury confectionery maker had served up a number of profit warnings in the last year, as cash-strapped Brits stuck to Freddo Bars instead of splurging on £30 trays of chocolate.
But in an update this November, the firm insisted that it was on the front foot again, as sales in its UK stores crept up eight per cent despite revenue declining by the same amount.
Charismatic founder, Angus Thirlwell, told City A.M. that the business “really valued” its time on the London market.
He explained: “It enabled us to develop and prosper, particularly during the pandemic when we were able to raise billions of pounds in a few hours. And that was a classic case of the market working the way it’s supposed to work and we are very grateful for the support of investors.”
It comes as reports suggest that the London Stock Exchange is set to lose as many as 30 £100m-plus firms from public markets this year, as they continue to be snapped up by private firms.
Thirlwell, the son of the founder of Mr Whippy ice cream, said that the deal will also help the chain to accelerate its growth plans in its home market of the UK and further.
In January this year, the firm outlined plans to open 21 new stores in Japan as part of a joint venture with Tokyo based Eat Creator Corporation.
He explained: “We had a big spurt of growth around and after the pandemic and that growth meant that we encountered some barriers to expansion which is normal in an organisation when you grow and nearly 40 per cent in one year.”
News of the deal has sent London markets on a sugar high with the firm’s share price up 161 per cent.
Russ Mould, investment director at AJ Bell, said: “The fact Mars is willing to pay a 170 per cent premium for the shares is remarkable on two accounts.
“First, bid premiums are typically in the 25 per cent to 50 per cent range so Mars paying so much more would suggest it has taken a long-term view of what the business is worth. Second, it suggests that Mars has spotted an opportunity and there is no way it wants to waste time with a low-ball bid. “
He added: “Hotel Chocolat ticks the right boxes and while its international expansion strategy hasn’t gone to plan, perhaps Mars thinks it has the necessary skills to make a good job of turning the UK chocolatier into a global name. It is hard to imagine shareholders turning down such a generous offer.”