Thorntons, the high street confectioner, yesterday saw its share price melt away as it said that talks with bidders for the business, which had included a group headed by its management team, had been called off.
The company revealed in October that a private equity group had expressed interest in a takeover. The executive directors then began exploring the possibility of finding financing to take the company private. Lehman Brothers and Permira were thought to be the two private equity players that were interested in bidding for the company.
The bid talks hit a stumbling block, however, when shareholders stepped in to tell the board that they thought the value of the company was reckoned to be at least 180p a share. Shareholders, anxious not to let the company be taken private on the cheap, said the offers on the table from private equity groups and trade buyers were just not high enough. John Thornton, the chairman of the company and 5.7 per cent shareholder, said none of the offers it had received had matched shareholders' expectations.
"We had to consider the approaches but we didn't set out to sell the company at any time. We are happy to stay as a public company. The shareholders set out what they saw as fair value and none of the parties could reach it. I hope that's the end of it and we can get on with running the business," Mr Thornton said. The shares yesterday fell 13 per cent to close down 22p at 144.5p.
Nick Bubb, an analyst at Evolution Beeson Gregory, said: "The bids must have come in at way below 180p. They obviously thought they could do more with it as a private company, but maybe they couldn't get the backing or the venture capitalists decided to back away. Rising interest rates could be putting some of them off."
Some analysts now believe Thorntons has opened itself up as a perpetual bid target. Rhys Williams, at Seymour Pierce, said: "This won't be the end of it, now the board has accepted that people can have a look at it."
Thorntons will report its year-end profits figures in two weeks time, which it said would be "in line" with expectations of around £7.3m. The business has struggled from hot weather, which has turned customers off its sticky chocolate products, but it did produce solid Christmas trading results of 4.6 per cent.
The company has been trying to end its reliance on the Christmas and Easter periods by increasing sales through supermarkets.