Hotel Chocolat has agreed a takeover deal by Mars for a cash consideration of £534m.

The UK specialist chocolatier retailer has said that the cash offer represented a premium of 170% to its London share price of 139p.

Hotel Chocolat, which is named after a hotel on a cacao estate in Saint Lucia, has a 20-year history, with 130 UK stores and a partnership in Japan, but lacks the funds required for a big push overseas.

Mars, the maker of a range of products from Pedigree dog food to Snickers bars, has proposed to pay 375p for each share in Hotel Chocolat. As an alternative, investors can elect to secure a share in the company for each share they already own.

Following the announcement, Sky News reported that shares in the chocolatier retailer increased by 164% as the market opened.

Global president at Mars Snacking, Andrew Clarke, said: "We have long admired the fantastic business that Angus, Peter and the Hotel Chocolat team have created. Hotel Chocolat is a differentiated and much-loved brand, with an impressive product offering and a deep commitment to its values of originality, authenticity and ethical trading. The Mars and Hotel Chocolat businesses are highly complementary, and during the course of our discussions with Hotel Chocolat's leadership it has also become clear that there is a very strong cultural fit - with purpose at the heart of both organisations, and a shared passion for quality and sustainability.

"Mars has a long and proud history in the UK, and today's announcement further strengthens our commitment to this important market by bringing an exciting brand into our portfolio and deepening our relationship with consumers. Building on the strong foundations that Angus, Peter and their team have established, we are very excited to support Hotel Chocolat's next phase of growth.

"We are confident that Mars will be an excellent long-term home for Hotel Chocolat, providing a like-minded, entrepreneurial and purpose-led environment in which to maximise the potential of the Hotel Chocolat brand which is already so beloved by consumers."

Investment director at AJ Bell, Russ Mould, added: "The fact Mars is willing to pay a 170% premium for the shares is remarkable on two accounts. First, bid premiums are typically in the 25% to 50% range so Mars paying so much more would suggest it has taken a long-term view of what the business is worth. Second, it suggests that Mars has spotted an opportunity and there is no way it wants to waste time with a low-ball bid. This looks like going in with its best offer with the hope of wrapping up the transaction as quickly as possible.

"Mars doesn’t have to worry about sales of its eponymous chocolate bar, but it does have to think about the evolution of the business and tapping into parts of the market who are looking for a higher quality product. Hotel Chocolat ticks the right boxes and while its international expansion strategy hasn’t gone to plan, perhaps Mars thinks it has the necessary skills to make a good job of turning the UK chocolatier into a global name. It is hard to imagine shareholders turning down such a generous offer."

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