Thursday, November 11, 1999
Changing market led to Gibson acquisition
American made three other bids
BY LISA BIANK FASIG
The Cincinnati Enquirer
In the years before Gibson Greetings Inc. agreed to be acquired by American Greetings, the Amberley Village card maker courted several takeover proposals and buy-out strategies, including a $20-a-share offer in 1998.
According to documents filed Tuesday with the Securities and Exchange Commission, Gibson's board rejected the offer in December 1998, because of regulatory fears.
The board cited antitrust risks and “the negative impact that a failed business combination would likely have on the Company's business and stockholder value.” Gibson was trading at just more than $11 a share at the time.
These antitrust concerns were the same that caused Gibson's directors to spurn an offer from American Greetings in March 1996. That offer was for $18 a share. Last week, Gibson agreed to be acquired for $10.25 a share.
Analysts say enough has happened in the past year to lower those regulatory hurdles. For one, Gibson lost some key clients. Also, e-commerce expanded the greeting card business into new formats, expanding the market.
“We're in such a rapidly changing world,” said Jeff Stein, an analyst who covers Gibson for McDonald Investments Inc. “I think Gibson's business has deteriorated markedly since last year.”
Gibson officials could not be reached Wednesday.
The documents trace Gibson's pending acquisition by American to March 1995. After several months of discus sion, directors of Gibson rejected the offer, citing antitrust concerns.
American's interest continued into 1996, when its $18-a-share offer was rejected. At that time, American said it would abandon efforts to acquire Gibson.
But the 18 months that followed marked a shift in Gibson's business that altered its position. What caused the shift are the same factors that reduced Gibson's market share last year: lost clients and the introduction of the electronic greeting card.
Gibson's board courted the $20-a-share offer from American in 1998 but turned it down. Still, the companies discussed “alternate transaction structures” in the following months while Gibson also talked with other parties.
Last spring, Gibson considered a proposal by a private equity fund. Under the proposal, the fund and Gibson's senior management would buy the company for about $13 a share.
But the fund could not get adequate financing and the deal fell through a month later.
By that time, another offer by American arrived, for $10 a share. Executives of the two companies began meeting in June. Talks continued into October and were temporarily broken off, until American agreed to accept certain regulatory risks.
In late October, the two companies settled on a buying price of $10.25 a share and a termination fee of $20 million.
The offer to acquire Gibson's shares commenced Tuesday and will end Dec. 8.
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