American Greetings founding family makes buyout offer

The Weiss family, founders of American Greetings Corp., along with related parties, have made a go-private offer that values the company at about $580 million. The company’s brands include American Greetings, Carlton Cards and Gibson.

The Weiss family are descendants of Jacob Sapirstein, who founded the company in 1906. CEO Zev Weiss, 45 succeeded his father, chairman Morry Weiss, in 2003. The company went public in 1958. Zev Weiss’ brother, Jeffrey Weiss, is the COO.

The brothers wrote in a letter filed with the Securities and Exchange Commission, “After careful consideration, we have concluded that the best course of action is for American Greetings to return to its roots,”

the

Wall Street Journal

reported.

A Reuters report

noted that the company’s revenue had declined by 17% over the last ten years and its British distributor, Clinton Cards, went bankrupt in June. The

Journal

article said American Greetings bought out the portion of Clinton it didn’t already own to limit its own credit exposure and turn the company around.

Retail strategist Todd Hooper of consulting firm Kurt Salmon told Reuters he didn’t expect another buyer to emerge.

The Weiss group said it has not yet secured funds for its offer, according to the Reuters report.

The

Journal

report said the Weiss family and its trusts and foundations own 94% of American Greetings’ Class B shares and have about 51% of the voting rights.

Reuters reported that the company said it would form a special committee of independent directors to consider the proposal. Intrepid Capital Management Inc. portfolio manager Ben Franklin told Reuters that the offer price was low and should be challenged by minority shareholders. Franklin told Reuters, “The independent directors lack the independence shareholders would like them to have.”

Portfolio manager Eric Cinnamond of River Road Asset Management, an investor in the company, told the

Journal

the Weiss family is “clearly being opportunistic” in light of the low share prove and easier availability of credit. But he added, “We don’t see how the board can justify this price.” (Source: Reuters, Sept. 27, 2012;

Wall Street Journal,

Sept. 26, 2012).