A takeover proposal for chocolate maker Thorntons was back on the drawing board today as more details emerged of the company’s poor recent trading.
Chairman Christopher Burnett, who previously indicated a bid worth £124m to take the company private, said further discussions were now planned with independent directors about the offer and its pricing.
The move comes after the company warned on January 3 that sales had been disappointing over Christmas.
It offered further details in a trading update today and warned it was likely its poor performance would continue.
Thorntons said total sales fell 6.2% to £112.3m in the 28 weeks to January 7, with business from the core estate of 369 shops off 6.4% at £80m.
The fall from UK shops was down 4.8% on a like-for-like basis.
The company, which is based at Somercotes in Derbyshire, blamed lower footfall over the period and said the uncertain outlook was likely to have a “material impact” on its performance for the full financial year.
In a separate statement dealing with the takeover issue, Thorntons said there was no certainty about the price or that a final offer would emerge.
The company was valued at £95m at the start of trading today after a fall in its share price since the start of the year.
Shares fell a further 6% to 134p following today’s update.
The indicative price of the offer in August had been 185p a share, including a final dividend worth 4.85p paid for the year to the end of June 2005.
Rhys Williams, an analyst at Seymour Pierce stockbrokers, said: “The statement does not read too positively, with Chris Burnett and his backers apparently looking at reducing the take out price.
“This is understandable considering the projective earnings of the business for this year and next. However, will the non-executives and the shareholders of the business allow the group to be privatised at a lower price?”
In the update, Thorntons said sales of its products through other retailers were down 0.7% at £13.4m.
Sales from Thorntons Direct increased by 3.5% to £3.5m.
Mr Burnett said: “We have sound promotional plans in place for every seasonal event in the second half, especially Easter, but believe that trading conditions will remain very challenging.
“It is likely that the disappointing sales in the year to date and the uncertain trading outlook will have a material impact on trading performance for the year, although, clearly, management will endeavour to reduce costs wherever possible in the second half.”
Mr Burnett joined the company in April 2004 from building materials group Marshalls.
References: EGi News 17/01/06
