[Member] Recommend Continue to Hold American Greetings

American Greetings (AM) today received a buyout offer from a group led by its CEO, Zev Weiss, the President/COO Jeffrey Weiss, other executives and their families. The offer values the company at $580 million, or $17.18/share.

While the offer is a 20% premium to the closing price yesterday, it still undervalues the company. The shares are currently trading at a low $16s so there is still much more upside from here.

The offer is currently under consideration by the board. As I see it, it is more likely to be accepted given the players staging the buyout. If this happens, it is advisable to wait for the stock price to reach $17+ before exiting the position.

Other possibilities include an increase in the buyout price, new suitors or an out right rejection which I think has a low likelihood of happening.

As a reminder, American Greetings bought 400 Clinton Cards stores in UK and the associated brand out of receivership for a pittance. This acquisition is still to start paying out and there is a great deal of unrecognized value in there. I think the CEO realizes this and finds the current valuation too attractive to pass up.

Bottomline: Hold for atleast $17/share unless there are new developments in the buyout.

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