It was in December of last year that Thorntons issued a profits warning, announcing “significant short-term difficulties with our new centralised warehouse, which resulted in disruption for all our customers. In particular in our UK Commercial channel we experienced lost and late sales with consequent missed promotional slots and reorders.”
Thorntons said that the warehousing and distribution facility was now working as normal and that “the move to a centralised warehouse was essential to meet current and future business patterns and growth. This will result in improved capacity and quality of service for our customers in the future.”
The well-known company has been going for 104 years, but with investors’ recent blow following a string of profit warnings and then the departure of its chief executive in May, offers of a takeover has come as a relief. Backed by the Thorntons’ board, a deal has now been agreed by Italian and family-owned chocolatiers Ferrero, which valued the business at £112m.
Sources have said that Ferrero had been keeping a close eye on Thorntons for almost two years and had been keen to approach the company’s board last month. After a particularly profitable performance in the UK chocolate market, Ferrero felt encouraged to go into secret discussions with the flagging firm. It is also understood that they even used an alias cover-up, codenaming their companies as ‘Prince’ and ‘Cinderella’, a tongue in cheek nod to the infamous Ferrero Rocher’s advert that featured an Ambassador’s ball.
Ferrero says it will retain the Thorntons factory in Alfreton, Derbyshire, if its proposed takeover of the business is successful, and that following completion of the offer it intends to work with the management and employees of Thorntons to expand the business. “The first step to achieving this goal will be conducting a strategic and operational review of Thorntons’ business and operations to identify opportunities arising, team alignment and other synergies,” it said, but it could not be certain what, if any, “repercussions there will be for the locations of Thorntons’ places of business, or the redeployment of Thorntons’ fixed assets or employees and currently has no firm intentions in relation to the foregoing”.
There are major concerns for the promises that are being made by Ferrero to ‘retain’ factories. As we have seen before with the not-so-distant Cadbury takeover by Kraft; it wasn’t long before any assurance of jobs being saved, were soon dismissed and of course compromised. The American takeover of Cadbury in 2010 was hugely controversial when the £11.5b acquisition by Kraft, saw the famous UK brand significantly devalue. It was within a matter of weeks that Kraft callously closed a factory, despite pledging during the deal that it would remain operational and jobs would be spared.
Kraft and the US owner, now called Mondelez after the confectionery business of Kraft was split out into a separate company in 2012, has not only gambled with the factories and the workers, but now we have also seen recipes, packaging and traditions continually being meddled with; changing the chocolate on the Cadbury Crème Egg, axing chocolate coins, rounding the corners on a Dairy Milk, putting Cadbury in Philadelphia cream cheese, ditching the Bournville chocolate from the Heroes tub, and then axing Christmas chocolate gifts to pensioners.
The latter of the changes and cut-backs was one of the perks of working for Cadbury, that the great Victorian firms set up by Quakers, and one that gestured you were well thought of and respected into retirement; long-term former employees were given a gift of chocolates at Christmas, as a token recognition for their years of service. However, Mondelez scrapped the gifts, claiming they needed the money to help plug the company’s pension black-hole. Pensioner, Ray Woods, who worked at the Bourneville factory in Birmingham for 36 years, said “The cost of the cutback is peanuts and to link it with plugging the gap in the deficit is pension, is laughable. (The parcels were) a way of somebody taking the trouble to say you worked for Cadbury for a long time”. “It’s tinged with sadness for me, and I think that a lot of people will think the same way.”
For Thorntons, the deal which was unveiled this week, with Ferrero offering 145p a share for Thorntons, which is a 43 per cent premium on the share price on Friday evening, was fully accepted by both the largest shareholder and company board. However, it is reported that the good news for investors, was not openly shared with the company’s 3,500 employees, as the new owner failed to disclose whether the current stores would remain open. However, bosses did say that the company intends to keep the Thorntons factory in Alfreton open. Is this an attempt to defend any comparisons with Kraft’s takeover of Cadbury, and the vast job losses and factory closures?
With the forthcoming takeover by Ferrero, there must be an understandable apprehension over what the future truly holds for factory workers of Thorntons. When big takeovers like this occur, it’s always going to rouse a sense of insecurity amongst the long-serving and loyal workers, regardless of promises being made. Hundreds of lives can be affected by the actions of the investors at the top, and as we’ve already seen, the UK continues to sell off all of our once reputable revenues and sources of income, such as power stations and large swathes of in-demand areas. There is a huge concern in the UK of asset stripping to the highest bidder, with little consideration for the longer-term consequences.
Let’s hope that those at the top will consider the strong workforce behind the business, and that those that have served for years to make a living and keep the business going, are the ones being looked after.
@FishHookCareers we want to know what you think the future holds for the Thorntons factory workers and whether, unlike Kraft, Ferrero keep their word on retaining the UK based factories.