American Greetings (UNKNOWN:UNKNOWN) said hello to a new ownership structure this morning.
The Cleveland-based greetings card manufacturer announced today that its chairman, chief executive officer, chief operating officer, and "related persons" -- all hailing from the Weiss family -- have signed an agreement to take AG private.
They intend to buy out all other shareholders for $18.20 per share cash, plus a probable single $0.15-per-share dividend payment assuming a dividend is declared and the transaction closes in July 2013, as planned. Thus, the total value of the buyout is estimated at $878 million inclusive of the company's debts.
The prospective buyers note that the basic price of $18.20 per share works out to a 13% premium over AG's closing price at the end of last week. As of this writing, investors are paying $18.09 per share for the company, responding to the buyout announcement by bidding the shares up 12.4% -- but not beyond the Weiss family's offer price -- suggesting there's little faith in a competing offer being made.
On the other hand, competitor CSS Industries shares sell for nearly twice the 0.3-times price-to-sales ratio of American Greetings' new share price, while the average stock in this industry costs more than 0.9 times sales. This suggests there may be room still left for another bidder to make a play.
The Weiss family first expressed its interest in a possible transaction last September. A committee set up to examine the offer unanimously recommends it.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of American Greetings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.