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Weiss Family Buys American Greetings at $19/Share

Zacks Equity Research

At last, the Weiss Family has triumphed in acquiring American Greetings Corp. (AM) as the majority of its shareholders accepted the $19.00 per share takeover offer. American Greetings, the nation’s second-largest greeting-card maker after Hallmark Cards, will no longer be operated as a public company after this week.

The Weiss Family had been attempting to acquire the company since September last year but did not succeed due to the low offer price. After an initial offer of $17.18 per share, the family raised offer price twice to $18.20 and then to $19.00.

The founding family will have to shell out over $600 million at the new offer price and will also take over a $350-million debt.

The shareholders approved the founding family’s offer in a special meeting held yesterday, wherein shareholders who represented 81% of the voting power of the company’s outstanding shares gave their positive nod for this transaction. Apart from this, the company, which competes with LookSmart, Ltd. (LOOK), also revealed that 67% of shareholders who aren’t affiliated with the Weiss Family or American Greetings leadership also gave their approval.

The Weiss Family currently holds a 7.8% stake in American Greetings. However, most senior managerial positions are currently held by the Weiss Family members. The transaction is expected to close on or about Aug 9, subject to the fulfillment of certain conditions. Following the closure of the merger agreement, American Greetings will become a privately-held company.

American Greetings, whose brands also include Carlton Cards, Recycled Paper Greetings and Papyrus, derives most of its revenues from paper cards, which is a shrinking industry. The intention behind Weiss Family’s decision to acquire full control over the company is said to make infrastructure investments independently and without worrying about what shareholders have to say. The family wants to remodel the 107-year company in expectations of better opportunities going forward. However, the company also had to take over a massive debt for this endeavor.

American Greetings designs, manufactures and sells greeting cards and other social expression products in the United States and internationally. The company provides greeting cards, gift packaging products, party goods, stationery, giftware, and custom display fixtures. The company distributes its products through mass merchandisers, chain drug stores, supermarkets, card and gift shops, department stores, military post exchanges, variety stores, and combo stores, as well as through its website Cardstore.com. American Greetings was founded in 1906 and is headquartered in Cleveland, Ohio.

Other Stocks to Consider

American Greetings comes under the Consumer Staples sector. Other stocks worth considering in the sector include Hillenbrand, Inc. (HI) and Service Corp. International (SCI). Both these stocks carry Zacks Rank #2 (Buy).

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Read the Full Research Report on AM

Read the Full Research Report on HI

Read the Full Research Report on SCI

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