September 26, 2012 / 7:10 PM / in 5 years

American Greetings gets $580 million offer from founding family

(Reuters) - American Greetings Corp (AM.N) received a go-private offer from a group led by its CEO and other members of the founding family, valuing the gift card and party goods company at about $580 million.

American Greetings, whose brands include American Greetings, Carlton Cards and Gibson, has been struggling to stay relevant in the Facebook age.

The company, whose revenue has shrunk 17 percent in the last 10 years, has also been hurt by the bankruptcy of its British distributor, Clinton Cards, in June.

CEO Zev Weiss, along with other members of the founding Weiss family and related parties, made the offer on September 25, American Greetings said on Wednesday.

The offer of $17.18 per share represents a premium of nearly 20 percent to the stock’s Tuesday close of $14.34.

The company’s shares, which have lost about a third of their value since last September, were up 16.8 percent at $16.75 in afternoon trading on the New York Stock Exchange.

Todd Hooper, a retail strategist at consulting firm Kurt Salmon, said the offer price was “relatively strong” and that he did not expect another buyer to emerge.

The group, which said it has yet to secure funds for its offer, held about 80 percent of the company’s Class B shares as of July 2. With each Class B share representing 10 votes, the group controls just over 50 percent of voting rights.

The company, whose traditional competitor is Hallmark Cards Inc, said it would form a special committee of independent directors to consider the proposal.

Ben Franklin, a portfolio manager with Intrepid Capital Management Inc, said the offer price was “pretty low” and should be challenged by minority shareholders.

    “It’s less than five times average free cash flow for the past three years,” said Franklin, whose firm holds about 6 percent of American Greetings.

    He also questioned the “independence” of the committee of independent directors.

    “The independent directors lack the independence shareholders would like them to have,” he said.

    The Weiss family are descendents of Jacob Sapirstein, a Polish immigrant who founded the company in 1906 shortly after moving to America.

    The Cleveland, Ohio-based company, which describes itself as the world’s largest publicly owned creator, manufacturer and distributor of social expression products, went public in 1958.

    CEO Weiss has held various positions with the company since joining in 1992. The 45-year-old took over as CEO from his father Morry Weiss, the current chairman, in June 2003.

    Reporting by Chris Peters and Ranjita Ganesan in Bangalore; Additional reporting by Nivedita Bhattacharjee in Chicago; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila

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