A sweet offer might win over Russell Stover and Whitman’s
02/21/2014 10:00 AM
02/21/2014 11:16 PM
If you really like Russell Stover and Whitman’s candies, here’s your chance to buy them all.
The Ward family, owners of the Kansas City-based boxed chocolate businesses, is exploring the possibility of a sale. The estimated price tag is $1 billion.
In a statement Friday, the family said it had hired an investment banking firm to help weigh the potential benefits of a sale. Goldman Sachs is helping the owners put a value on the businesses and consider their options.
Russell Stover Candies Inc. has been owned by the Ward family since 1960 and Whitman’s Candies Inc. since 1993.
A sale would mark yet another shift in ownership for some of the Kansas City area’s most recognizable businesses. AMC Theaters are 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.
So far, the owners of Kansas City’s boxed chocolate empire are just shopping their companies.
“There is no imminent sale,” said Robbie Vorhaus, a spokesman. “It’s part of a strategy for how to continue to grow and build the business.”
The Ward family announced the plans Friday after a report in The Wall Street Journal said a deal could top $1 billion.
Russell Stover and Whitman’s combine as the nation’s third-largest chocolate maker, according to their website, trailing only Hershey and M&M Mars. Those two competitors would be logical candidates to consider a purchase.
Industry observers cited many potential buyers, including Mondelēz International, which owns Cadbury after a spinoff from Kraft Foods, and Warren Buffett’s Berkshire Hathaway Inc., the Omaha-based owner of See’s Candies.
Berkshire in particular has a history of buying well-run, family-owned companies with strong brands, said John Hense, a managing partner with CC Capital Advisors, an affiliate of Country Club Bank that helps companies evaluate mergers and raise capital. For example, Berkshire bought Helzberg Diamonds Shop Inc., based in North Kansas City, in 1995.
“This would be right up their ally,” Hense said.
Hense said private equity investors would be interested in the candy companies, both for their brands and their ability to generate cash to repay the debts from a buyout.
Just as there are many potential bidders, Hense said there are many reasons the Wards may be considering a sale now.
Financing is widely available for deals, he said, and there are relatively few companies on the market with the strong brands that Russell Stover and Whitman’s offer. It means a deal could bring an attractive price for the sellers.
“You owe it to yourself in this type of market to test the waters and that may be what they’re doing,” Hense said.
Production of the companies’ mostly handmade treats employs about 2,700 year round to generate between 80 million and 100 million pounds of chocolate each year. They operate factories in Abilene and Iola, Kan., as well as in Colorado and Texas.
A candy plant in Clarksville, Pa., closed in early 2002, and one in Tennessee stopped production in 2005 but continues to operate as a distribution site.
The Kansas City area has benefited from the family’s business success in part through the philanthropic work of the Ward Family Foundation. Its regular contributions to Kansas City parks have repaired facilities, maintained landscapes and otherwise improved the public spaces.
The family also has worked with others, for example partnering in 2004 with a group of anonymous donors to help finance $12 million in construction and renovations for the University of Kansas athletic programs.
A billion-dollar sale of the Wards’ companies would make a handsome payoff for the labors of two kitchen candy makers in Denver who started it all in 1923.
Clara and Russell Stover first sold their handmade sweets under the brand Mrs. Stover’s Bungalow Candies. The Kansas City connection began a year later when one of the couple’s first five stores opened here.
By 1928, Kansas City was home to the fast growing brand’s first factory, and all of its operations moved here in 1928, according to the company’s official history. The name changed to Russell Stover in 1943.
Russell Stover’s growth allowed it to become a publicly traded business, and that opened the door to its current owners.
Louis Ward, who had made boxes for the famous chocolateers, bought a controlling stake in the business in 1960. His sons, Thomas and Scott Ward, began to run Russell Stovers as co-presidents in 1993 — the same year they acquired Whitman’s Candies, which has been in business since 1842.
“Starting with our father, Louis Ward, in 1960, the Ward family has successfully grown Russell Stover and Whitman’s Candies into the largest family-owned candy manufacturer in the country,” Thomas Ward, chief executive officer, said in Friday’s statement. “We are privileged offering consumers fine chocolates made exclusively in the United States, and our intention is for these traditions to continue.”
The Ward family took Russell Stover private in 1981. Shortly afterward, the company’s expansion gained a boost from its newly automated process of packaging candies in thin paper cups.
The Russell Stover and Whitman’s brands represent half of all U.S. sales of boxed chocolates and sugar-free candies, the statement said. They sell in 37 company-owned stores and through 70,000 distributors in the United States and Canada.
1923 – Clara and Russell Stover first sell Mrs. Stover’s Bungalow Candies made in their Denver kitchen
1932 – Operations relocate to Kansas City, where one of its first stores had opened
1943 – Name changes to Russell Stover Candies
1960 – Louis Ward, who makes boxes for the company, buys the business
1993 – Thomas and Scott Ward become co-presidents of the family-owned business; buy Whitman’s Candies
2005 – Whitman’s works with Weight Watchers International on new candies line
2014 – Ward family engages Goldman Sachs to consider benefits of selling companies
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