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Thorntons admits buyout talks after rise in shares

James Davy
Thursday 16 October 2003 00:00 BST
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Shares in Thorntons surged almost 15 per cent after the confectioner revealed it had held preliminary talks about a management buyout.

The company said its independent directors had permitted the management team to investigate sources of finance to allow Thorntons to be taken private. The company's statement came after a 5p rise in its share price.

The non-executive director John Jackson said a recent "tentative approach" from an unnamed venture capital firm had not been pursued "at the price offered". But he said there were many advantages for the company being "in the private arena". Thorntons could save up to £500,000 in fees associated with being a public company, a material figure for a firm that last month reported a pre-tax profit of £6.4m for the year ended June.

An analyst at Seymour Pierce said the company could fetch around 180p a share, valuing Thorntons at almost £120m. The shares closed at 155.5p, ahead 20.5p on the day.

Thorntons issued a profit warning in July when it blamed warm weather for a downturn in its sales performance.

Seasonal factors could affect the bidding process, with the completion of any deal unlikely until after the crucial Christmas trading period.

Jackson said the management "remained focused on maximising Christmas sales".

Thorntons is the latest company to seek the public-to-private route in recent times as the weak equity market and low interest rates have encouraged management buyouts.

One leading private equity player said Thorntons did not appear to be a particularly enthusiastic public company, with a family shareholding of around 20 per cent and many of the directors also holding large stakes.

He also said the size of the company, its low growth and erratic performance, had not made Thorntons an especially attractive company for investors A move to take the company private "makes sense" in this situation.

Thorntons' announcement would bring out interested parties, but it was hard to guess at potential trade bidders, he said. No other company has a similar business model to Thorntons, with its mix of sweets manufacturing and retailing.

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