Koch Industries subsidiary Koch AG Investment is providing $240 million in a deal that allows management of American Greetings Corp., members of the Weiss family, to take the company private.
The deal is valued at $878 million, including the assumption of debt. Koch will acquire non-voting preferred stock. The rest of the deal will be financed by contributions of American Greetings shares owned by the Weiss Family and $600 million in committed debt financing.
Koch subsidiaries often make investments in companies that they don't plan to operate if they have confidence in the management and the long-term future of the business, said Steve Feilmeier, chief financial officer for Koch Industries, which is based in Wichita.
In December, Koch made a substantial investment in Guardian Industries Corp.
The capital markets have largely rebounded from the recession, but are still hesitant to lend if there aren't adequate hard assets for collateral, Feilmeier said. That provides opportunity for Koch, which studied the company and the Weisses, before investing.
Feilmeier said the management is excellent and the Internet won't be wiping out the greeting card industry anytime soon.
"It's not dying," he said "It's revenues are flat to slightly growing. ... Send your wife a text for her birthday and see how that works out for you. Cards still matter."
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