Ferrero's diplomatic pursuit of its Cinderella is no Cadbury story

I fear that if Thorntons survives at all, it may well finish up as another Cadbury - a tiny part of some huge foreign multinational, with employees thrown out of work, factories closed, shops closed and the usual and unseen damage to the locality and the country,” warned Peter Thornton, a former chairman of the eponymous retailer and a member of the founding family, in an interview two years ago with one of our journalists. 

He added: “Certainly if the current crazy strategy of selling what is perceived to be exclusive and special products in run-down Thorntons retail stores - and they are being discounted even here - and the selling and discounting in supermarkets continues, disaster is inevitable.”

Thornton’s words (or at least some of them) have proved prophetic. Thorntons looks certain to be gobbled up by the huge foreign multinational that is the Italian chocolatier Ferrero in a £112m deal, following an announcement on Monday. Yet amid the blanket coverage that followed the news, few have mourned the transferral of Thorntons from UK ownership (the Daily Mail being the obvious exception). Some shareholders are reportedly digging their heels in. And serious disgruntlement may yet come to light. But I believe there are a number of reasons why this deal - in contrast with Kraft’s acquisition of Cadbury - has been broadly welcomed.

First: this is not a hostile takeover. The board has raised the white flag, realising it’s better off in foreign hands than at the mercy of British supermarkets and the UK high street.

Second: unlike Cadbury, Thorntons doesn’t have a global supply chain. It’s a UK-centric business - and, in the world of chocolate, an anomaly. By leveraging the Ferrero supply chain, the Thorntons brand stands a far better chance of survival.

Third: there’s the sense of diplomacy. The approach for Thorntons was dubbed ‘Project Cinderella’, and clearly Ferrero has played the Prince Charming role well. In their overtures to Thorntons, the Ferreros have been at pains to point out the similarities between these two family-owned businesses (as opposed to the massive differences in terms of scale and success).

Fourth: while it’s keeping its options open when it comes to some aspects of the business, one promise Ferrero has made is to keep the factory at Alfreton open - and unlike Kraft’s insistence it wouldn’t shut the Fry factory in Bristol, we believe them. That’s because…

Fifth: we think Alfreton is an asset that, well managed, can bring something new to the Ferrero ball. Better that than turning into a pumpkin, anyway.