American Greetings considers a $603.9 million buyout offer
October 3, 2012 12:24 PM
American Greetings Corp. is considering a return to private ownership after 60 years as a publicly traded company. In a letter dated Sept. 25 to the greeting cards firm's board, CEO Zev Weiss, as head of a shareholder group, proposed buying all of about 35.15 million shares for $17.18, a deal valued at $603.9 million.
Though Weiss's group, which includes the Weiss family that owns a large portion of American Greetings shares, does not yet have binding financing in place, they are confident that financing can be secured. If approved, the Weiss family would retain the shares because "their ownership in the company is a strategic investment and [they] have no current intention to sell all or any significant portion of their shares," Weiss wrote.
American Greetings, No. 208 in the Internet Retailer Top 500, expects its board of directors to form a special committee to review the offer, but says it will not comment until the committee renders a decision. American Greetings shares first sold publicly in 1952, according to the company's web site.
American Greetings reported mixed results for the second quarter and first half of fiscal 2013.
For the period ended Aug. 24, American Greetings reported:
- Online sales for AG Interactive, the e-commerce division, decreased 2.5% to $15.8 million from $16.2 million in the second quarter of fiscal 2012.
- Net income for AG Interactive was flat at $4.6 million.
- Total sales increased 6.4% to $393.8 million from $370.2 million.
- The company as a whole posted a net loss of $4.3 million compared with net income of $14.5 million in Q2 of fiscal 2012.
Online sales accounted for 4.0% of total sales compared with 4.4% in the second quarter of fiscal 2012.
For the first half of the year, American Greetings reported:
- Online sales for AG Interactive declined 17.2% to $31.3 million from $37.8 million in the first half of fiscal 2012.
- Total sales increased 1.7% to $786.9 million from $773.9 million.
- Net income for AG Interactive increased 16.7% to $8.4 million from $7.2 million.
- Overall net income fell 93.6% to $3.0 million from $47.1 million compared with the first two quarters last year.
AG Interactive's first half net income growth resulted from a 46.2% increase in Q1 net income, to $3.8 million from $2.6 million. "The increase was driven by increased sales of seasonal greeting cards as we had a strong performance for Mother's Day," Stephen J. Smith, chief financial offer, said during a Q1 earnings call.
Online sales accounted for 4.0% of total sales compared with 4.9% in the first half of fiscal 2012.
American Greetings cited $18.7 million in charges stemming from its June acquisition of Clintons Cards, a United Kingdom-based greeting cards retailer, as affecting its income. During a recent conference call with analysts, Smith says the company believes in Clintons Cards. "The environment that permitted the transactions was one where Clintons Cards needed long-term capital to support a business model that had the brand that we believed in," Smith said. "We invested in that brand and those stores, and we hope that that's a good long-term investment."