Hotel Chocolat founders to land £280m after it agrees £534m Mars takeover

Hotel Chocolat’s founders are set for a £280m payday after the upmarket chocolates maker agreed to a £534m takeover by American food company Mars at a big premium to its market value.

The chief executive, Angus Thirlwell, and senior executive Peter Harris and their family trusts hold shares that will be valued at £140m apiece after the takeover of the London-listed business, announced on Thursday morning.

The company had been valued by stock market investors at only £191m on Wednesday evening, although the Mars offer was still well short of the company’s peak valuation at morethan £700m in late 2021. Shares in Hotel Chocolat, which is listed on London’s Alternative Investment Market, surged by 160% after the deal was announced.

Hotel Chocolat has been through a turbulent time in recent years, as it expanded abroad, only to bite off more than it could chew.

Mars is one of the world’s biggest food companies and the US’s fourth-largest private company, with brands ranging from Mars bars and Snickers confectionery to Pedigree dog food and Dolmio pasta sauces. Mars employs 140,000 people around the world, of which 10,000 are in the UK.

Mars, which is still owned by the Mars family, said it would use its international might to expand Hotel Chocolat’s brand in the UK and abroad. However, it said it will keep Hotel Chocolat’s UK manufacturing.

Thirlwell, who will stay on as Hotel Chocolat chief executive, said: “The brand flies with consumers in different markets. The bit that we found that needs more work is about manufacturing product in-country and all the logistics behind the scenes.”

He said that the takeover accelerates an expansion that would have taken longer as an independent business. “This is not a hostile takeover,” he added on a call with reporters.

Angus Thirlwell is to reinvest 80% of his proceeds from the deal in Hotel Chocolat Photograph: Anna Gordon/The Guardian

Thirlwell said he would reinvest 80% of his proceeds from the deal in the new business, but Harris will cash out most of his stake as he retires.

Thirlwell and Harris founded the business in 1993, but switched to the Hotel Chocolat brand in 2003 before opening their first store in North London a year later. It has since expanded to 131 stores in the UK and 21 in Japan under a licensing agreement, plus a luxury hotel on its cacao farm in the Caribbean island of St Lucia.

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Hotel Chocolat listed on the stock market in 2016, handing Thirlwell and Harris more than £20m each. It has since doubled its revenues to £205m in the financial year to 2 July, but described those results as “disappointing” because of a “year of intensive reshaping to deal with the consequences of Hotel Chocolat’s previous fast growth”.

Andrew Clarke global president of Mars Snacking, which runs its chocolate brands, said Mars was ruling out any changes to Hotel Chocolat recipes that would diminish its quality.

During the coronavirus pandemic Hotel Chocolat enjoyed a surge in online sales as spending was directed away from pubs and restaurants – and its closed stores – and its chocolate subscriptions benefited. However, it then slumped to a loss as costs rose, prompting the company to try to cut back.

Thirlwell said Mars would help the company to “scale much more quickly”.