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Recycled Paper Fights American Card M&A Play
The listed greeting card maker’s acquisition of the smaller, recycled card maker's debt comes after the potential buyer acknowledged earnings shortfalls.
September 29, 2008
Recycled Paper Greetings is not taking listed American Greeting Card Company’s attempt at an M&A play lightly.
The recycled material card maker, upon hearing news that American Greeting had purchased $44 million of its first lien debt, said it will sue to push the larger competitor away from its debt buy.
“We were surprised both by American Greetings’ disclosure of its accumulation of Recycled Paper Greetings debt on its quarterly earnings conference call, as well as the stated answer for American Greetings’ inability to speak further about its actions when questioned by analysts,” stated Recycled Paper Greetings chief executive Jude Rake. “In fact, it is RPG’s position that AG’s actions represent a clear violation of a written confidentiality agreement executed as part of an overture by American Greetings. To that end, weeks before American Greetings made its announcement we filed a lawsuit in the US District Court for the Northern District of Illinois detailing our claim. We plan to continue vigorously fighting actions by AG which we believe are predatory in nature and intended for the sole purpose of preventing us from conducting business on a fair playing field.”
Recycled Paper Greetings pointed out in its statement that American Greeting’s quarterly earnings for its most recent quarter failed to hit analyst expectations.
Calling the debt purchase by American Greeting an act of “desperation” that indicates company executives are “worried,” Rake said Recycled Paper will not accept any M&A considerations from its competitor, which is about 20 times larger.
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