American Greetings to Go Private
American Greetings Corp. has agreed to be taken private by the Weiss family, in a deal that values the greeting-cards company at least $575 million above an offer made earlier this year, according to The Wall Street Journal.
The company signed a definitive agreement under which a newly organized entity owned by the Weiss Family, including the company's Chairman, Morry Weiss; Director and Chief Executive Officer, Zev Weiss; and Director, President and Chief Operating Officer, Jeffrey Weiss; and related persons and entities, will acquire the company.
After the Weiss Family first expressed its interest in a possible transaction in September 2012, the American Greetings Board of Directors formed a Special Committee of independent directors to examine the family's proposal and explore alternatives, and ensure that the terms of any transaction were fair, if any agreement was reached.
After completing a review of the proposal, considering alternatives, negotiating the price and other transaction terms with the Weiss Family, and the Special Committee concluded unanimously that the transaction with the Weiss Family was fair and in the best interests of the Company's public shareholders (other than the Weiss Family shareholders). Based in part on the unanimous recommendation of the Special Committee, the agreement was also approved unanimously by the other independent members of the Board. Members of the Weiss Family did not participate in the deliberations of the Special Committee and recused themselves from the vote of the Board of Directors.
Zev Weiss, the company's CEO, said, "The family believes the transaction is a win for all concerned, including public shareholders. The negotiations with the Special Committee and its advisors were vigorous and arm's length, but we're pleased that we were able to come to an agreement that properly respects all parties' interests."
Under the agreement, American Greetings Class A and Class B shareholders, excluding the Weiss Family and related entities, will receive $18.20 per share in cash, and, if declared by the Board of Directors, one regular quarterly dividend of $0.15 per share declared and payable in a manner consistent with the company's past practice. If the transaction closed in July 2013, the targeted closing date, the total cash amount shareholders would receive would be $18.35 per share. The total value of the transaction is approximately $878 million, including the assumption of the company's 7? percent notes due 2021, which 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 $18.20 per share price represents a premium of 26.9 percent over the trading price for Class A shares on September 25, 2012, the date on which the Weiss Family initially proposed to acquire the Company, and a premium of 13 percent over the closing trading price on March 28, 2013.
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, a subsidiary of Koch Industries Inc., and $600 million in committed debt financing, consisting 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 (listed alphabetically).
Jeffrey Weiss, the company's president and chief operating officer, 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."
Completion of the transaction is subject to certain closing conditions, including receipt of the financing pursuant to the commitments described above, shareholder approval and other customary conditions. In addition, the closing of the merger is subject to a condition that the holders of a majority of all outstanding shares not held by the Weiss Family or by any director or executive officer of the company or any of its subsidiaries approve the merger.
Further information regarding the terms and conditions in the definitive agreement, will be contained in a Current Report on Form 8-K which will be filed promptly with the SEC.
Peter J. Solomon Company, L.P. is acting as financial advisor and Sullivan & Cromwell LLP is acting as legal advisor to the Special Committee of American Greetings' Board of Directors. Baker & Hostetler LLP is acting as legal advisor to American Greetings. KeyBanc Capital Markets and Macquarie Capital are acting as preferred stock placement agents to the Weiss Family, KeyBanc Capital Markets is acting as financial advisor to the Weiss Family, and Jones Day is providing legal counsel to the Weiss Family. Latham & Watkins LLP is providing legal counsel to Koch AG Investment.
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The company signed a definitive agreement under which a newly organized entity owned by the Weiss Family, including the company's Chairman, Morry Weiss; Director and Chief Executive Officer, Zev Weiss; and Director, President and Chief Operating Officer, Jeffrey Weiss; and related persons and entities, will acquire the company.
After the Weiss Family first expressed its interest in a possible transaction in September 2012, the American Greetings Board of Directors formed a Special Committee of independent directors to examine the family's proposal and explore alternatives, and ensure that the terms of any transaction were fair, if any agreement was reached.
After completing a review of the proposal, considering alternatives, negotiating the price and other transaction terms with the Weiss Family, and the Special Committee concluded unanimously that the transaction with the Weiss Family was fair and in the best interests of the Company's public shareholders (other than the Weiss Family shareholders). Based in part on the unanimous recommendation of the Special Committee, the agreement was also approved unanimously by the other independent members of the Board. Members of the Weiss Family did not participate in the deliberations of the Special Committee and recused themselves from the vote of the Board of Directors.
Zev Weiss, the company's CEO, said, "The family believes the transaction is a win for all concerned, including public shareholders. The negotiations with the Special Committee and its advisors were vigorous and arm's length, but we're pleased that we were able to come to an agreement that properly respects all parties' interests."
Under the agreement, American Greetings Class A and Class B shareholders, excluding the Weiss Family and related entities, will receive $18.20 per share in cash, and, if declared by the Board of Directors, one regular quarterly dividend of $0.15 per share declared and payable in a manner consistent with the company's past practice. If the transaction closed in July 2013, the targeted closing date, the total cash amount shareholders would receive would be $18.35 per share. The total value of the transaction is approximately $878 million, including the assumption of the company's 7? percent notes due 2021, which 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 $18.20 per share price represents a premium of 26.9 percent over the trading price for Class A shares on September 25, 2012, the date on which the Weiss Family initially proposed to acquire the Company, and a premium of 13 percent over the closing trading price on March 28, 2013.
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, a subsidiary of Koch Industries Inc., and $600 million in committed debt financing, consisting 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 (listed alphabetically).
Jeffrey Weiss, the company's president and chief operating officer, 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."
Completion of the transaction is subject to certain closing conditions, including receipt of the financing pursuant to the commitments described above, shareholder approval and other customary conditions. In addition, the closing of the merger is subject to a condition that the holders of a majority of all outstanding shares not held by the Weiss Family or by any director or executive officer of the company or any of its subsidiaries approve the merger.
Further information regarding the terms and conditions in the definitive agreement, will be contained in a Current Report on Form 8-K which will be filed promptly with the SEC.
Peter J. Solomon Company, L.P. is acting as financial advisor and Sullivan & Cromwell LLP is acting as legal advisor to the Special Committee of American Greetings' Board of Directors. Baker & Hostetler LLP is acting as legal advisor to American Greetings. KeyBanc Capital Markets and Macquarie Capital are acting as preferred stock placement agents to the Weiss Family, KeyBanc Capital Markets is acting as financial advisor to the Weiss Family, and Jones Day is providing legal counsel to the Weiss Family. Latham & Watkins LLP is providing legal counsel to Koch AG Investment.
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