In summer 2014 Lindt & Sprüngli took over Russell Stover Candies, LLC, based in Missouri, USA, a deal that significantly strengthened the Group's leading position in the world's biggest chocolate market USA. Dieter Weisskopf, CFO of the Lindt & Sprüngli Group, and Andreas Pfluger, member of the Group Management and CEO of Russell Stover, report on the progress made to date with the integration of Russell Stover's business into the Group.
Dr Dieter Weisskopf
The CFO of Chocoladefabriken Lindt & Sprüngli AG
“We managed to secure the long-term financing just a few days after closing the transaction. Working closely with leading banks, we issued three bonds totaling one billion francs on the Swiss capital market. The placement of the three tranches was spread across a broad selection of institutional investors, private banks, and retail investors. Demand was very high and the issue was oversubscribed.
This placement allowed us to secure financing at very attractive terms while interest rates were at historic lows. At the same time, the transaction enabled us to systematically diversify the structure of our financial liabilities and establish a staggered maturity profile, while the chosen financing structure underpins the conservative and long-term orientation of the Group's financing strategy. Further positive aspects worth mentioning include what was – in hindsight – fortunate timing for purchasing the necessary US dollars at very attractive exchange rates, and the special tax advantages of the financing structure. Lindt & Sprüngli's shareholders can rest assured that their capital is in good hands.
Following the successful financing of the acquisition, the next challenge was to integrate Russell Stover's reporting structures into the Lindt & Sprüngli Group. The focus has now shifted to the gradual adaptation of business processes so as to bring them in line with our Group standards. In the area of production, for example, our Group-wide “lean management program” is being adopted and Lindt & Sprüngli's rigorous quality requirements and sustainability standards are being introduced, step-by-step. The local team's other priority is to improve the company's operating performance. In this context, initial potentials are already tackled in the LINDT companies in North America in areas such as procurement, logistics, information technology, retail strategies, and tax management.”
Andreas Pfluger
The CEO of Russell Stover
“One of the key tasks after the acquisition closed on September 8, 2014 was to carefully inform the workforce about the new ownership structure in detail. Employees' reaction to the takeover was generally very positive. They welcome the fact that the strong track record of this traditional company will be maintained with the backing of a leading international chocolate manufacturer and are keen to work together to continue Russell Stover's success story. To ensure everyone is committed to the same corporate values, the LINDT Credo was introduced as well and its various elements are now being gradually applied to each area of the business.
Since the closing of the transaction, integration has been progressing well in virtually every corner of the business and should be fully concluded over the next two years. This process is being supported by an experienced internal management team. Their specialist expertise plays a vital role in the successful completion of this challenging task.
Over the years Russell Stover has carved out a successful position for itself in the American market. With Russell Stover, Whitman's and Pangburn's we hold a leading position in seasons with a gifting tradition, such as Christmas, Valentine's Day and also Easter. This success is based on a wide range of goods, efficient production processes, and esteem for American consumers since many years. Since Russell Stover has spent relatively small sums in the past on classic consumer marketing and product development, much more will be invested in these areas in the future. On the one hand, Russell Stover can benefit from Lindt & Sprüngli 's excellent know-how in these areas. On the other hand, more staff have already been drafted in to augment the marketing and sales team.
While all these processes are running in the background, we continue to supply Russell Stover's fine chocolate products to millions of loyal customers on a daily basis.”
