American Greetings to Sell Party Goods Business, Production Operations to Amscan
CLEVELAND—Dec 22, 2009—American Greetings Corp. (NYSE: AM) today announced a strategic alliance with Amscan, Inc. (Amscan), a leading designer, manufacturer and distributor of party goods based in Elmsford, NY.
As part of this transaction, American Greetings will sell to Amscan inventory, equipment and processes used in the manufacture and distribution of party goods. American Greetings will now source its party goods from Amscan, and will continue to distribute party goods to various channels, including to its mass, drug, grocery and specialty retail partners. Amscan will have exclusive rights to manufacture and distribute products into various channels, including the party store channel. As a result of the strategic alliance, American Greetings will be able to offer a broader assortment of licensed and non-licensed party goods products to its retail partners.
American Greetings expects to receive cash of approximately $25 million and a warrant to purchase approximately 2% of the Class A Common Stock of AAH Holdings Corporation, Amscan's ultimate parent corporation.
As a result of this transaction, American Greetings will wind down its manufacturing of party goods products. American Greetings expects to incur non-cash asset impairment costs of approximately $10 million to $15 million. In addition, American Greetings expects to incur facility related cash closure costs, primarily severance, in an amount that is still being quantified.
CEO Zev Weiss said, "The transaction with Amscan allows us to provide our retail customers with a broader assortment of party goods products. We will be certain to make this a seamless transition to ensure that our retail partners and consumers benefit from the alliance. The decision to change our business model in no way reflects on the hard work or commitment of the affected employees. I would like to thank them for their effort and dedication over the years."
About American Greetings Corp.
For more than 100 years, American Greetings Corp. (NYSE: AM) has been a manufacturer and retailer of innovative social expression products that assist consumers in enhancing their relationships. The Company's major greeting card brands are American Greetings, Carlton Cards, Gibson, Recycled Paper Greetings and Papyrus, and other paper product offerings include DesignWare party goods and American Greetings and Plus Mark gift-wrap and boxed cards. American Greetings also has the largest collection of electronic greetings on the Web, including cards available at AmericanGreetings.com through AG Interactive, Inc. (the Company's online division). AG Interactive also offers digital photo sharing and personal publishing at PhotoWorks.com and Webshots.com and provides a one-stop source for online graphics and animations at Kiwee.com. In addition to its product lines, American Greetings also creates and licenses popular character brands through the American Greetings Properties group. Headquartered in Cleveland, OH, American Greetings generates annual revenue of approximately $1.7 billion, and its products can be found in retail outlets worldwide. For more information on the Company, visit http://corporate.americangreetings.com.