April 1 American Greetings Corp's
founding and controlling family clinched a deal to buy the gift
card company at a time when it is facing intensifying
competition from social media sites.
The deal with the Weiss family, who made their initial offer
six months ago, is valued at about $878 million including debt
and settlement of stock options, the parties said on Monday.
Shareholders excluding the family and related entities will
receive $18.20 per share in cash, plus an additional 15-cent
dividend if the deal closes in July as planned.
Excluding debt and including the dividend, the deal values
American Greetings at about $580 million.
American Greetings shares rose 12 percent to $18.05 in
morning trading, below the deal price but well above the $14.34
the stock was trading at before the family made its original
offer in September.
American Greetings, whose traditional competitor is
privately held Hallmark Cards Inc, said a special committee of
independent directors had concluded that the deal with was fair
and in the best interests of shareholders.
The Weiss family and affiliates control more than 50 percent
of the Cleveland, Ohio-based company's voting shares.
The company, which describes itself as the world's largest
publicly owned creator, manufacturer and distributor of social
expression products, went public in 1958, about 52 years after
it was founded by Polish immigrant Jacob Sapirstein.
American Greetings, which also sells party products and
whose brands include Carlton Cards and Gibson, has struggled to
stay relevant in the internet age, and revenue has declined by
about 14 percent over the past 10 years.
More recently, it has been hurt by costs related to the
bankruptcy of its British distributor, Clinton Cards Plc, last
June. Clinton Cards failed to repay a 35 million pound ($54
million) loan to American Greetings.
American Greetings reported a loss of $809,000 in the third
quarter ended Nov. 23, compared with a year-earlier profit of
$20.2 million. Revenue rose to $507 million from $465 million,
but about $68 million of revenue in the latest quarter came from
the takeover of about 400 Clinton Cards' stores in the UK.
The bidding group, which includes Chief Executive Zev Weiss,
Chairman Morry Weiss and Chief Operating Officer Jeffrey Weiss,
raised its offer to $17.50 per share in January from the
original offer of $17.18 in September.
KeyBanc Capital Markets is financial adviser to the Weiss
family, while Peter J. Solomon Co LP is advising the special
committee of American Greetings' board.
Sullivan & Cromwell LLP is legal adviser to American
Greetings' special committee looking at the deal, while Baker &
Hostetler LLP is advising American Greetings. Jones Day is legal
counsel to the Weiss family.