Executives lead offer to take American Greetings private

— American Greetings Corp. said Wednesday that a group led by its chief executive officer and chief operating officer wants to buy the company and take it private in a deal that values it at about $581 million.

The Cleveland-based greeting card company’s shares jumped 17 percent onthe news.

American Greetings, whose brands also include Carlton Cards, Recycled Paper Greetings and Papyrus, said its board received the proposal from Chief Executive Zev Weiss and his brother, President and Chief Operating Officer Jeffrey Weiss, on Tuesday.

The Weiss brothers said in a letter to the board that they want to return American Greetings, which was founded more than a century ago and began trading publicly in 1958, to family ownership.

American Greetings operates a card-making plant in Osceola that employs about 900 people. The company announced in August that it planned to add about 125 jobs over the next six months.

The proposed transaction “provides the public stockholders of the company with liquidity and certain value in a highly volatile period in the equity markets,” the Weiss brothers said in the letter. “We anticipate maintaining intact American Greetings employee base, which we view as its most important asset, and current senior management.”

The group proposing the buyout, which also includes other investors and members of the executives’ families,wants to acquire all of the company’s common stock that it doesn’t currently own for $17.18 per share. That is a 20 percent premium over American Greetings’ Tuesday closing stock price.

Based on the company’s about 33.8 million outstanding shares, the offer values American Greetings at $580.7 million.

American Greetings said it expects its board to form a special committee of independent directors to consider the proposal. The company said it doesn’t expect to make any further comments about the offer until a deal is struck or it rejects the bid.

Members of the Weiss family currently make up a large part of its senior management. In addition to the brothers, their father, Mory Weiss, serves as the company’s chairman,and Erwin Weiss, their uncle, is its senior vice president for specialty business.

In their letter to the company’s board, the Weiss brothers said they have not secured financing but that they’re confident they will be able to.

In June, American Greetings said its fiscal first-quarter profit dropped 78 percent, dragged down by charges related to the bankruptcy of Britain’s Clinton Cards PLC. Total revenue fell 3 percent to $393.1 million. The company is scheduled to release second-quarter results Friday.

American Greetings had acquired about 400 Clinton Card stores earlier in June, along with the namesake brand.

The U.K. greeting card company is one of American Greeting’s biggest customers, but ran into financial trouble. It had about 750 stores before being placed under administration last month.

Shares of American Greetings rose 17.4 percent, or $2.49, to close at $16.83, after peaking at $17.10 earlier in the day.

Information for this article was contributed by Sapna Maheshwari of Bloomberg News.

Business, Pages 21 on 09/27/2012

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