AG, Hallmark move to strengthen operations

Chain Drug Review, Feb 2, 2009

NEW YORK -- In an effort to streamline their business and maximize efficiency, the two leading greeting card companies have recently undergone a period of consolidation and acquisitional activity.

Last year American Greetings Corp. announced a partnership with Kathy Davis Studios, and in 2009 is bringing the company's fresh art and voice to shoppers through its retail network.

"To support the launch of this partnership, we are offering a unique collection of stationery, giftware and home decor in all of our company-owned retail stores this spring," says Steve Laserson, American Greetings' vice president of greeting cards.

The company also recently announced plans to acquire Recycled Paper Greetings Inc. (RPG), a creator and designer of humorous greeting cards.

"As we looked to RPG, it became clear that this company would help us fulfill our mission of providing innovative products and services to meet our consumers' needs to connect, express and celebrate," said Zev Weiss, American Greetings' chief executive officer.

Under terms of the agreement (a "prepackaged" Chapter 11 filing), American Greetings will issue $54.7 million of new 7.375% notes due in 2016 and will infuse as much as $18.4 million in cash into Recycled Paper. American Greetings also has agreed to provide up to $10 million debtor-in-possession financing to RPG.

Meanwhile, Hallmark Cards Inc. recently announced that it is consolidating greeting card manufacturing from three subsidiaries into the parent company's production operations to make better use of increased capacity in Hallmark's manufacturing facilities in Lawrence and Topeka, Kan.

The transaction began in 2008 and will continue through June 2009. As many as 350 jobs at subsidiaries Hallmark Canada in Toronto, DaySpring Cards in Siloam Springs, Ark., and Sunrise Greetings in Bloomington, Ind., are affected.

Other business functions, including product distribution as well as marketing, finance and other administrative functions, remain in the three subsidiaries' headquarter communities.

Following the consolidation, about 500 full-time employees will remain at Hallmark Canada, 325 will continue to work at DaySpring and about 160 will remain at Sunrise Greetings.

The move follows consolidation of party and gift wrap manufacturing from two buildings into one in Hallmark's Leavenworth, Kan., manufacturing facility, and of distribution operations from two facilities into one in Kansas City.