Just before the weekend, US chocolate bar producer Mars Inc. announced that it will be taking over all outstanding shares of British chocolatier Hotel Chocolat through its 100% subsidiary Hive Bidco, Inc. The boards of the companies have agreed to a corresponding takeover agreement.

Under the takeover agreement, Mars or Hive Bidco is offering Hotel Chocolat shareholders 375 British pence (GBp) in cash for each of their shares. This offer values the British chocolatier at 534 million British pounds (GBP – equivalent to about 609 million euros).

Note: Alternatively to the cash offer, Hotel Chocolat shareholders can also receive non-listed Hive Bidco B Shares (a „Rollover Share“) for their Hotel Chocolat securities. However, the Hotel Chocolat Directors do not recommend this share exchange option as opposed to the cash offer.

Mars offers huge takeover premium Based on the Hotel Chocolat share price on 15.11.2023, the last trading day before the announcement of the takeover offer, which was at 139 GBP, the cash offer of 375 GBp includes an exorbitant takeover premium of 169.8%.

Compared to the volume-weighted average price of the Hotel Chocolat securities over the last 60 days of 127 GBp, the takeover premium is even 194.2%.

The holders of Hotel Chocolat shares have certainly appreciated this „pre-Christmas gift“. Before I go into further details of the takeover agreement, I would like to briefly introduce the companies involved.

The companies in brief Founded in 1911 and in family ownership, Mars Inc. is a world-leading producer of sweets and food products. The company based in McLean, Virginia (Greater Washington DC area) produces and distributes sweets, food, pet food and hygiene products.

Familiar brands of the company in Germany include Mars, Twix, Bounty, Orbit, Ben’s Original, Miracoli and Pedigree, Whiskas and Royal Canin. Mars employs more than 140,000 people worldwide in over 80 countries. The company achieved a sales revenue of 47 billion US dollars (USD – equivalent to 43 billion euros) in the 2022 financial year.

Hotel Chocolat is a British premium chocolate maker based in Royston, Hertfordshire (about 60 km north of London). The company was founded in 1993 by Angus Thirlwell and Peter Harris, who are still the company’s Managing Directors. Both hold 27% of Hotel Chocolat’s share capital.

Hotel Chocolat plc produces high-quality chocolate and cocoa products and sells its products online, in 131 of its own stores and through selected wholesalers. In addition, the company operates an eco-hotel and a cocoa farm on the Caribbean island of St. Lucia.

Hotel Chocolat went public in 2016. In the 2022/23 financial year, which ended on 02.07.2023, the company’s almost 1,400 Hotel Chocolat employees generated sales of 204.5 million GBP (233.4 million euros). This was 10% less than in the previous year. The operating profit was -3.78 million euros.

This is how the stock exchange reacted As expected with such a high takeover premium, the share price shot up after the announcement of the deal. Specifically, the price rose on the London Stock Exchange (LSE) last Thursday by an amazing 161.8% to 364 GBp.

This meant that the price was just slightly below the 375 GBp offered by Mars when the bell sounded. Obviously, investors are assuming that the deal will go through smoothly.

This is how it will continue In a few weeks, the Hotel Chocolat shareholders will have to approve the deal with a sufficient majority at a specially convened general meeting and a court hearing. After that, the responsible supervisory authorities must also give the green light for the deal.

The companies have not given a date for the closing. Mars intends to delist the Hotel Chocolat shares following completion of the transaction.