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CHICAGO (AP) — Standard & Poor's Ratings Services has put American Greetings Corp. on watch for a possible ratings downgrade after an offer to take the greeting card company private.
The top management at American Greetings announced an offer Wednesday to buy the remaining shares in the company that it does not hold and take the company private in a roughly $581 million deal.
American Greetings CEO Zev Weiss and his brother, President and Chief Operating Officer Jeffrey Weiss, led the group that also includes other investors and members of their family. They offered to pay $17.18 per share, a 20 percent premium over American Greetings' Tuesday closing stock price.
The Weiss family currently controls about 50 percent of the voting power given their holdings of Class A and B shares. They have indicated that some existing shareholders would likely reinvest or roll over their shares as part of this buyout and the group would take on debt to pay for the rest of the transaction.
The company said it plans to form a special committee to review the proposal but will not make any further comment until a decision is made.
Standard & Poor's said it believes the company's credit metrics would weaken if a deal were to go through because of the increased debt, although the rating agency said it does not have the financing plans at this time.
S&P placed all of the company's ratings, which includes its BB+ junk-grade status corporate credit rating, on watch with negative implications.
Shares of American Greetings increased 34 cents, or 2 percent, to close at $17.01. Its stock price is up nearly 19 percent since the day before it announced the offer.