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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
NOVEMBER 26 - DECEMBER 2, 2012
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Observers say they may want to own part of card maker, or profit quickly on sale By MARK DODOSH mdodosh@crain.com
Two investors that both have acquired 5% stakes in American Greetings Corp. since the family of CEO Zev Weiss offered to take the company private could be after nothing more than modest and relatively quick returns on their investments. Then again, one or both may be positioning themselves to be among the owners of the greeting card company should it no longer be traded on the New York Stock Exchange. A handful of local investment bankers contacted by Crain’s Cleveland Business say it’s impossible to know the intent of Michigan investor James Grosfeld and New York investor Daniel Tisch in each accumulating more than 1.4 million shares of American Greetings’ Class A common stock. However, the acquisition experts did lay out scenarios for how
Messrs. Grosfeld and Tisch, either individually or in concert, might try to exploit their positions. Ralph Della Ratta, managing partner of Western Reserve Partners LLC in Cleveland, said it’s possible that the two men could work in tandem in an effort to gain a better price for their American Greetings shares than the $17.18 a share that the Weiss family and related interests have offered for the stock. “You never really know the conversations going on between shareholders,” Mr. Della Ratta said. He suggested that Messrs. Grosfeld and Tisch even could work with other outside shareholders to exert pressure on the Weiss family to raise its go-private offer. Michael Paparella, managing director of Candlewood Partners LLC in Cleveland, said either or both of the investors may see their purchases as nothing more than arbitrage plays, where they simply are looking to make money off the narrow spread between what they paid for their stock and the ultimate price the Weiss family or another buyer pays for the company. However, Mr. Paparella said it’s also possible that either Mr. Grosfeld or Mr. Tisch — or both — may be accumulating their stakes for “a private equity style of investment.”
That is, one or both could become part of the group taking the company private by rolling their shares into American Greetings. Mr. Paparella said he expects there will be communication between these and other large shareholders in the company and the financial adviser to the special committee of American Greetings independent directors that is charged with evaluating the Weiss family’s offer. “The financial adviser would have in their standard set of work steps” contacting the large shareholders to gauge their thoughts about the offer, Mr. Paparella said. As for the go-private move itself, Mr. Della Ratta called it “a transaction that makes great sense.” “American Greetings’ largest competitor is a private company, Hallmark,” he said. “Hallmark can see everything that American Greetings is doing” because of all the documents American Greetings must file as a public company, Mr. Della Ratta said, “but not vice versa,” which puts American Greetings at a big competitive disadvantage. He also said that by going private, American Greetings executives can manage the company for the long haul and “avoid the difficulty in forecasting earnings because of the ups and downs of the business.” ■
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