17 Jul 2014 Lindt bets big on US chocolate market with purchase of Russell Stover

Lindt & Spruengli is gobbling up Russell Stover Candies, a move that will make the Swiss confectioner the third-biggest chocolate maker in North America.

On Monday (July 14), Zurich-based Lindt said it had struck a deal to buy Russell Stover, which makes the popular Whitman’s Samplers brand of gift chocolates, in the biggest transaction in its nearly 170-year history.

The acquisition will push Lindt’s sales above $1.5-billion in the huge North American market.

Pricing details of the transaction, which will be financed through cash and debt, have not been disclosed. People familiar with the situation said before the deal was announced that the price was close to $1.5-billion.

Lindt Chairman Ernst Tanner called the deal a “unique opportunity” that provides the company with an opportunity to expand its North American chocolate business. Last year, Lindt, which owns the Ghirardelli Chocolate, generated $943.2-million in sales, roughly a third of its total revenue in North America.

Russell Stover, which also makes the Pangburn’s brand of candies, has annual sales of around $600-million and generates roughly $60-million in earnings before interest, tax, depreciation and amortisation, a measure of cash flow.

Analysts said the acquisition will give Lindt, which already has a strong presence on the East and West coasts, a higher profile in America’s central states, a stronghold for Russell Stover. The closely-held company—which started as a family-run business in 1923 in Denver—was acquired by the Ward family in 1960 and now runs a chain of 35 shops, most of them in the central and southern part of the country.

Russell Stover’s chocolates, associated with Valentine’s Day in the US, are also distributed through roughly 70,000 drugstores across the US and Canada.

Jean-Philippe Bertschy, an analyst at Vontobel, estimates the deal would give Lindt around 9% of the US market, ahead of Swiss rival Nestlé.