Greeting-card maker American Greetings Corp. (AM) said Monday that it has agreed to be taken private by a group led by Chief Executive Officer Zev Weiss in a deal valued at about $878 million. Shares of American Greetings are gaining more than 12 percent in the regular trading session following the announcement.
Under the deal, American Greetings will be acquired for $18.35 per share by a newly organized entity owned by the Weiss family, including chairman Morry Weiss, CEO Zev Weiss, and director, president and chief operating officer Jeffrey Weiss, as well as related persons and entities.
Commenting on the deal, Jeffrey Weiss said, "We are excited to be able to lead the Company into the next chapter of its history. The transaction returns the company to private ownership in a way that we believe enables the Company to continue to serve the interests of its customers, employees, suppliers and the communities in which it operates as it has for over a century."
Founded in 1906, Cleveland, Ohio-based American Greetings is the world's largest publicly traded greeting card company. It became a publicly traded company in 1952. The company generates annual revenues of about $1.6 billion.
American Greetings' Class A and B shareholders, excluding the Weiss family, will receive $18.20 per share in cash and a regular quarterly dividend of $0.15 per share, if declared by the company's board of directors. Shareholders will thus receive a total cash amount of $18.35 per share if the transaction closes within the targeted closing date of July 2013.
The $18.20 per share price represents a 26.9 percent premium over the closing stock price of $14.34 for class A shares on September 25, 2012, the date on which the Weiss family initially proposed to acquire the company. It also represents a 13 percent premium over the company's closing stock price on March 28, 2013.
In late September 2012, American Greetings said it received a non-binding proposal to be taken private by the Weiss family for $17.18 per share, in a deal that valued the company at about $530 million. The offer was to acquire the remaining shares in American Greetings that was not owned by the Weiss family. The offer was later raised to $17.50 per share in mid-January.
The total value of the deal is now about $878 million, including the assumption of American Greetings' 7? percent notes due 2021 that will remain outstanding after the transaction, the repayment of borrowings under the company's revolving credit facility, and the settlement of stock options not held by the Weiss Family.
The transaction will be financed through a combination of the contributions of the American Greetings shares owned by the Weiss family, cash funded by a $240 million non-voting preferred stock investment committed by Koch AG Investment, LLC, and $600 million in committed debt financing. The debt financing will consist of a $400 million term loan and a $200 million revolving credit facility, and cash on hand.
The senior lender group consists of Bank of America, N.A., Deutsche Bank AG New York Branch, KeyBank National Association, Macquarie Capital USA, Inc. and PNC Bank National Association.
In Monday's regular session, AM is trading at $18.08, up $1.98 or 12.27 percent on a volume of 4.18 million shares.
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