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Ferrero to buy UK chocolate maker Thorntons for $178 mln

* Thorntons (LSE: THT.L - news) board to back 112 mln stg Ferrero offer

* Ferrero to examine cost savings once deal completed

* Thorntons shares jump over 40 percent to bid price (Adds analysts, details, background, shares)

By Esha Vaish and Giancarlo Navach

June 22 (Reuters) - The Italian firm behind Ferrero Rocher chocolates and Nutella spread has agreed to buy British chocolate retailer Thorntons for 112 million pounds ($177 million), striking a rare deal to expand in Europe's biggest confectionery market.

The deal is the first by family-owned Ferrero International since the death earlier this year of patriarch Michele Ferrero, who was Italy's wealthiest man and largely shied away from acquisitions as he built up a business that also spans Kinder Surprise eggs and Tic Tac mints.

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Ferrero said on Monday it would pay 145 pence a share in cash for the 104-year-old Thorntons, a 43 percent premium to the British firm's closing stock price on Friday. Thorntons' management said it backed the deal.

Thorntons has been hit in recent years by the rise of newer and upmarket brands such as Green & Black's and Hotel Chocolate. It has had some success by shifting to sell more of its chocolates through third parties while closing some of its own stores, but after a profit warning in December its chief executive of four years, Jonathan Hart, is stepping down.

"It's good timing," said N+1 Singer Capital Markets analyst Matthew McEachran of Ferrero's offer, adding it appeared to be pitched at a fair value for shareholders.

Thorntons shares, which had lost around 40 percent since March 2014, jumped to touch the offer price.

Analysts said Thorntons was a good fit for Ferrero, which has strong, premium brands but no retail platform to showcase them.

"The Thorntons store network will provide the company the opportunity to add a more directly experiential approach to its strategy," said Euromonitor International's Lamine Lahouasnia. "If all goes well with absorption of Thorntons stores in the UK, we could see similar happenings around the world in years to come."

According to Euromonitor, Britain is the world's third-biggest confectionery market behind China and industry leader, the United States.

Ferrero, which traces its roots back almost 60 years, said it would review Thorntons to identify potential cost savings, but ruled out closing the British firm's Alfreton factory in central England. It will also keep the Thorntons brand.

The death of its patriarch had sparked speculation Ferrero might be a takeover target for rivals such as Mars, Mondelez International, Nestle (VTX: NESN.VX - news) or Hershey.

Michele Ferrero had stayed out of the dealmaking that has gripped the consumer goods industry in recent years.

He vetoed the idea of a bid for Cadbury in 2009, another British chocolate maker which was ultimately taken over by Mondelez, according to sources familiar with the company. His only acquisition was a Turkish hazelnut factory in 2014, aimed at securing supply of the ingredient precious to his Nutella.

Ferrero said it owned, or had agreements to own, 34 percent of Thorntons after buying stakes from top shareholder Crystal Amber and from others.

($1 = 0.6292 pounds) (Writing by Kate Holton; Additional reporting by Martinne Geller and Agnieszka Flak; Editing by Mark Potter)