Lindt & Sprungli unveiled its "biggest and most
important strategic acquisition" ever, of US-based Russell Stover Candies, increasing
its presence in a North American market where it is already growing at "double
The Swiss-based group said it would "greatly enhance" its
status in North America's chocolate market, the world's biggest, by buying Missouri-based
Russell Stover Candies, lifting to third its rank in the region's chocolate
makers, behind Hershey and Mars.
"This biggest and most important strategic acquisition to
date in Lindt & Sprüngli's history is a unique opportunity for us to expand
our North American chocolate business," said Ernst Tanner, the group's chief
The price of the takeover was not revealed, although there
is talk that the price may have reached E1.4bn, which would represent nearly
three-time Russell Stover's sales and, according to Kepler Cheuvreux, a lofty multiple
of 23 times earnings before interest, tax, depreciation and amortisation
Taste for the US
The deal adds Russell Stover, whose pralines gained a
high-profile appearance in the 1994 movie Forrest Gump, to a Lindt &
Sprungli portfolio which already includes Ghirardelli – the group's last major
acquisition, in 1998.
Indeed, there was some surprise among analysts that Lindt
& Sprungli had opted for a developed market purchase, rather than expanding
into Asia, seen by many investors as possessing greater growth potential.
Furthermore, Lindt & Sprungli has limited its scope for achieving
cost saving through the deal by committing to keep the Russell Stover headquarters
in Kansas City, besides to "improvements" at the business's chocolate plants in
Colorado, Kansas and Texas.
However, Lindt & Sprungli highlighted advantages from
the deal including strengthening in gift markets, where Russell Stover is
particularly strong, and in boosting its relationship with retailers.
Lindt & Sprungli also noted "above average" expansion in
trade in the US, where it achieved "double-digit organic growth in sales again"
for the first half of the year.
Monday's deal will take the group's North American sales,
which were SFr30m in 1992, above $1.5bn next year.
"The acquisition of Russell Stover clearly signals Lindt
& Sprüngli's intention to improve its market position in North America, and
further enhances the significant contribution which it already makes to the
dynamic growth of the premium chocolate segment," the group said.
Lindt & Sprungli shares stood 1.5% higher at SFr55,550
in morning deals.