By Kevin Kelley
American Greetings announced Nov. 28 that it is delaying its plans to build its new headquarters at Crocker Park in Westlake. The cause of the delay is a bid by the management group to take the publicly traded cardmaker private.
“The company’s board of directors believes it is advisable to temporarily delay the project in light of the proposal from Zev Weiss, company CEO; Jeffrey Weiss, president and COO; and other members of the Weiss family to take the company private,” a press release from Americans Greetings stated. “American Greetings still intends to develop its new world headquarters in the Crocker Park development located in the city of Westlake. American Greetings believes that the delay will be short and will have no material adverse impact on the company.”
American Greetings’ partners in the new headquarters project – the city of Westlake and Crocker Park owner Stark Enterprises – expressed understanding of the delay.
“Because of the legal issues involved in taking any public company private, we understand that it is not an opportune time to finalize our transaction with American Greetings for its new world headquarters at Crocker Park until the privatization process is completed,” Robert Stark, chief executive officer of Stark Enterprises said in a press statement. “We continue to actively work on the project with the city of Westlake and American Greetings in anticipation of a closing and commencing of construction in the first quarter of 2013. The original schedule for the new $400 million expansion of Crocker Park and the opening of new retail stores and apartments at Crocker Park in 2014 remains the same.”
Westlake Finance Director Prashant Shah acknowledged that city officials were not expecting the delay.
“When we heard about it a few days ago, we were certainly surprised,” Shah told West Life. “We were going full steam ahead.”
Shah said the delay was described by American Greetings officials as lasting “a few months.” The finance director expressed the hope that the delay would not be significant in the long run because it comes during winter, when construction work would be limited.
“They still fully intend to build their world headquarters in Westlake,” She said.
Westlake Ward 5 Councilman Ken Brady said he first got word of the delay Nov. 27. His understanding was that it was, as explained by American Greetings, due to the the Weiss’ buyout offer. Aspects of the privatization attempt apparently have to be settled before the company proceeds with construction of the new headquarters.
Ward 1 Councilman Ed Hack said he would not be worried even if American Greetings were to back out of the deal altogether. His reasoning is that the property at Crocker Park is so valuable that another company would soon seek to build there.
Shortly after the Weiss offer was announced, Mayor Dennis Clough told West Life that he did not believe the offer would affect the company’s plans to move to Westlake.
“We’re actually looking forward to seeing construction start within the next six to eight weeks,” the mayor said in early October.
A Westlake City Council committee meeting scheduled for Nov. 27 that would have dealt with financing related to the company’s headquarters was abruptly canceled. The city was close to selecting contractors to construct road improvements and parking garages related to the project. The city also was close to selling about $50 million of bonds to fund construction of those public improvements. At a Nov. 1 council meeting, Council President Mike Killeen said American Greetings attorneys were seeking the finalization of financial matters related to the project by Nov. 15.
In a Sept. 25 letter to American Greetings’ board of directors, the Weiss family offered to acquire the company for $17.18 per share, an amount that values the card maker at $580 million. The letter was written by Zev Weiss, the company’s chief executive officer, and Jeffrey Weiss, the president and chief operating officer, on behalf of themselves and certain other members of the Weiss family and related parties.
The offer, at a premium of roughly 20 percent of the market price that day, “provides the public stockholders of the company with liquidity and certain value in a highly volatile period in the equity markets,” the family wrote.
Soon after the offer was issued, a portfolio manager with Intrepid Capital Management Inc., which owns about 6 percent of American Greetings, told Reuters the Weiss’ offer price was low and should be challenged by other shareholders. Two East Coast law firms released statements saying they would investigate whether American Greetings’ board of directors is fulfilling its fiduciary duties to shareholders.
American Greetings said that its board of directors has formed a special committee of independent directors to consider the Weiss buyout offer.