THE home of what was once one of the biggest names in confectionery is about to enter a new era.

The site of Terry's of York, overlooking the city's Knavesmire, is being bought in a deal thought to be worth about £26m.

The huge factory closed last year when its parent company, Kraft, farmed out its products, including the famous Chocolate Orange, to other sites across Europe.

Locally-based developer Grantside is buying the site and predicts it could eventually employ more than the 2,000 who worked for Terry's in its heyday.

It plans to convert the office buildings into a prestige hotel with spa and health club which would employ 200.

But the long-term plan of creating 220,000sq ft of office space on a business park elsewhere on the 51-acre site could create thousands more jobs.

Also envisaged are posh apartments in the Grade II-listed building by the racecourse, and possibly a new art gallery and a museum.

"This could focus on the Terry's family history and chocolate-making," said Grantside's managing director Steve Davis. "We might get a chocolate-maker back on the site, on a very small scale, to make luxury chocolates for sale in the museum."

Employers on the site would be encouraged to commission artists to create paintings, sculptures and installations for an art trail.

Mr Davis said Grantside had beaten more than 20 others in the race to acquire the site and it expects to complete the purchase by the end of the month.

Nationally-known hotel chains are said to have already expressed an interest but none have been named.

The developer says that factors working in favour of the site for redevelopment include its proximity to both the city centre and the A64, together with its position by the racecourse and the city's speedy rail links with London.

l Peter Terry, the last member of the Terry family to manage the York chocolate factory, has died at St Monica's Hospital, Easingwold.

His great grandfather, Sir Joseph Terry was the son and namesake of the man who gave his name to the firm.

He leaves a widow, Carin, six sons and a daughter