American Greetings gets lift from Gibson buy

Chain Drug Review, Feb 28, 2000

CLEVELAND -- The new deadline for American Greetings Corp.'s tender offer for outstanding shares of Gibson Greetings is March 2.

The expiration date was prolonged one month because the companies are still responding to a request from the antitrust division of the Justice Department for additional information about their pending merger. The request is normal, executives at both suppliers say.

At the start of February 9.6 million shares of Gibson had been tendered. Its acquisition by American Greetings would combine the No.2 and No.3 players in the social expressions market.

The $163 million deal would boost American Greetings' volume from about $2.2 billion to more than $2.4 billion. American Greetings plans to maintain the Gibson name to extend its branding strategy into emerging retail channels. Consumers will be able to select from a broader and more relevant assortment of cards from American Greetings, while Gibson's retail partners should experience greater productivity, executives say.

"This is an exciting opportunity to expand our greeting cards business into another channel with a proven brand name, Gibson" notes American Greetings president and chief operating officer Ed Fruchtenbaum. "We expect the acquisition to create substantial ongoing synergies that will help us compete more effectively and efficiently in an increasingly competitive marketplace."

Chairman and chief executive officer Marry Weiss says the transaction is the latest example of American Greetings' commitment to its long-term goals.

"Since we unveiled our strategic plan in 1997 we have taken a series of steps to grow all of our businesses," he says. "We have also introduced innovative greeting cards lines and signed important licensing agreements that have enhanced our entire product offering.

"Those factors, coupled with an improved focus on managing our capital resources, continue to allow American Greetings to grow while adding value to all of our key audiences."

Gibson chairman and chief executive officer Frank O'Connell credits American Greetings with valuing the smaller company's 150-year-old heritage and its brand equity.

At the same time American Greetings' on-line business stands to gain from Gibson's investment in the Internet. Gibson cards are available on the World Wide Web from Sparks.com., and it owns a share of the privately held Egreetings network.

Earlier this month the AmericanGreetings.com subsidiary of American Greetings and iWon.com, a CBS-backed destination portal, launched a free on-line greetings service. The "iWon Greeting Cards" site for iWon.com will be exclusively and completely created, hosted and managed by AmericanGreetings.com as the first step in its new business-to-business initiative to become an electronic greetings provider to noncompetitive web sites.

Under the agreement the iWon Greetings site will feature more than 500 free electronic greetings. Links to the greetings can be found initially in the "iWon Features" area on the home page and later throughout iWon.com. Within its first week iWon Greetings had already become one of the most popular features on iWon.com.

The site will preserve the user experience and branding of iWon.com, but will be entirely developed and housed by AmericanGreetings.com. Accordingly, iWon.com visitors will be able seamlessly to send and receive free electronic greetings as a value-added feature of iWon.com. iWon.com users will collect entries into the $10,000 daily, $1 million monthly and $10 million tax day (April 15, 2000) giveaways for every greeting viewed and sent.

The launch of iWon Greeting Cards is the largest partnership to date for AmericanGreetings.com in its business-to-business strategy to provide greetings and related functions to noncompetitive web sites looking to offer visitors the latest in on-line communications and social expression tools.

"We understand the on-line greetings marketplace, and we've got the drivers of success -- technology and an incredible creative studio. We can provide a turnkey greetings solution to other Internet companies; let them do what they do best, we'll do what we do best, and we both win," says Josef Mandelbaum, acting chief executive officer of AmericanGreetings.com. "We're pleased to launch this new initiative with iWon.com, an Internet innovator."