Russell Stover gains international flavor from new owners

07/14/2014 5:38 PM

07/14/2014 8:46 PM

Born and bred in the middle of America, boxed chocolate maker Russell Stover Inc. is going international.

The Kansas City-based company agreed Monday to be acquired by Lindt & Sprüngli AG, the Switzerland-based maker of Lindt and Ghirardelli chocolates. The terms of the cash sale were not disclosed though published reports said the price may have been as high as $1.5 billion.

The sale may lead the iconic Russell Stover and Whitman’s brands to Swiss outlets, Paris cafes, German sweet shops and other European locales.

“It’s going to be a global play,” said John Hense, managing partner at CC Capital Advisors, which is an affiliate of Kansas City-based Country Club Bank and helps companies evaluate mergers and raise capital.

Hense said the buyer paid a sweet price for Russell Stover, a clear bet on significant increases in sales. Lindt may be looking at overseas markets, given that the Russell Stover and Whitman’s brands already are sold widely in the United States.

Lindt’s widespread European sales operations would provide a ready-made continental entry for its newly acquired brands.

If Russell Stover’s $1.5 billion price tag is accurate, that would be three times the company’s $500 million annual sales total, which includes Canada.

Hense said that’s the kind of price paid for high-tech companies.

“I haven’t seen anything (for a reported price) under $1 billion, and I’ll tell you a billion is a good price,” Hense said.

In the United States, Lindt’s and Russell Stover’s brands are considered mass marketed “drugstore brands,” Pam Williams, president of the Fine Chocolates Industry Association, said in an email. She said Lindt’s executives had been “aggressive in updating their branding over the last 10 years from traditional to premium.”

The purchase will make Lindt the third-largest U.S. chocolate maker, with a combined 7.9 percent of the market, though well behind the Hershey Co. and Mars Inc., according to Bloomberg News. Nestle is third, pending Lindt’s purchase of Russell Stover.

Tom Ward, president, chief executive officer and co-owner of Russell Stover, declined a request for an interview. In the companies’ announcement, he said the merger with Lindt provided “great potential for the future in the dynamic and growing chocolate business.”

The announcement did not disclose Ward’s role in the company after the sale.

Ernst Tanner, Lindt’s chief executive officer, told Bloomberg that the company might be able to increase its share of U.S. chocolate sales to 10 percent in the next three years.

Lindt spokeswoman Sylvia Kälin said Monday, “Russell Stover and Whitman’s are excellent products, which are household names.”

Lindt intends to keep the Kansas City company’s brands, “their footprint and their character,” Kälin said, though she said it was too early to comment on Lindt’s plans for expansion.

Russell Stover will keep its headquarters at 4900 Oak St.

U.S. sales of Lindt’s namesake chocolates and Ghirardelli products could benefit from Russell Stover’s network of retail outlets and other distribution relationships. The Russell Stover brands are sold in 70,000 groceries, drugstores and similar outlets, in addition to 35 company stores.

Lindt’s sales in the United States totaled $945 million in its most recently reported fiscal year. It has 1,800 U.S. employees and makes Ghirardelli products in the San Francisco area and Lindt products in New Hampshire.

There is no overlap with Russell Stover’s four manufacturing plants, which are in Abilene and Iola, Kan., Texas and Colorado. Russell Stover employs 2,700 year round. Both companies report seasonal increases in jobs.

Kälin said the sale was subject to a federal anti-trust review but that no “major hurdles” were likely. The sale is expected to be completed in August or September.

Russell Stover candies were born in the kitchen of Russell and Clara Stover’s Denver home in 1923. One of their first stores opened in Kansas City a year later, followed by all of the company’s operations in 1932.

The Ward family became involved in 1960 when Louis Ward bought control. The family has expanded the business with innovations and the purchase of Whitman’s.

In February, Russell Stover said the family was considering a sale of the longtime local company, having hired Goldman Sachs to search for suitors.

The purchase by Swiss-based Lindt also marks another chapter in foreign investment in Kansas City area companies.

Among recent transactions, AMC Theaters is now largely the property of China-based Dalian Wanda Group. Sprint Corp. is 80 percent owned by Tokyo-based SoftBank Corp. Boulevard Brewing belongs to Belgian brewer Duvel Moortgat.

To reach Mark Davis, call 816-234-4372 or send email to

Sweet sales

Merging Russell Stover Inc. with Lindt & Sprüngli AG will produce the third-largest U.S. chocolate maker, pushing past Nestle.

Hershey Co. 31.6%

Mars Inc. 25.8%

Nestle 6.1%

Lindt & Sprüngli 5.5%

Mondelez International 3.3%

Yildiz Holding 2.5%

Russell Stover 2.4%

Ferrero 1.5%

See’s Candies 1.2%

Ferrara Candy 1.0%

Source: Bloomberg News


Join the Discussion

The Kansas City Star is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Terms of Service