AMERICAN BID FOR GIBSON: WHAT'S IN THE CARDS?

JOEL ELSON

CLEVELAND -- The pending acquisition of Cincinnati-based Gibson Greetings by American Greetings, based here, has some in the supermarket industry weighing the pros and cons.

There are retailers and wholesalers who believe the move should have a positive effect on supermarket greeting cards. They view the proposed acquisition as a way to put a new spin on supermarket greeting-card racks with expanded variety.

"It's a very positive move and the best thing that could have happened," said Charles Yahn, vice president of general merchandise at Associated Wholesalers, York, Pa.

Others, however, are not so sure. Dave Lynam, nonfood buyer for Harding's Friendly Markets, Plainwell, Mich., said the buyout would leave only two major players supplying social-expression products. "I'm not excited about the fact that there will be fewer manufacturers out there," he said. And, despite its "standing as the third player in greeting cards, Gibson kept the other manufacturers on their toes."

American would acquire Gibson for about $162 million in stock in a deal that would unite the second- and third-largest U.S. greeting-card makers behind Kansas City, Mo.-based Hallmark Cards. American is to pay $10.25 a share for each of Gibson's 15.8 million shares. The companies signed a definitive agreement and their boards have approved the deal but await regulatory approval.

Gibson's stock has been in an almost year-long decline, and acquiring the card maker should help American expand its U.S. and international greeting-card business and its electronic-marketing operation, said Morry Weiss, chairman and chief executive officer of American Greetings.

"In spite of all the problems that we had heard, Gibson took good care of our stores," said Yahn, adding, "it was a company staggering, and now they are part of a strong franchise. This just has to be better for the future for us."

American Greetings, which intends to retain the Gibson name, said it expects the proposed acquisition to result in ongoing revenues of about $225 million and annual cost-savings of at least $50 million.

Gibson is the exclusive supplier of greeting cards and related social-expression products to Associated's retailers, where -- under the Gibson card program at some 112 of Associated's retailers -- "card sales were up." Once the sale is completed, Yahn looks forward to American Greetings incorporating some Gibson cards into its product lineup.

Lynam, too, expects his American Greetings card centers to reflect some Gibson selections once the ink on the agreement is dry. He sees this as a potential benefit. Despite the dwindling number of suppliers, "I'm certain American will incorporate some better Gibson items," he said. "I would suspect that will be a plus for the department."

Frank O'Connell, Gibson's chairman and CEO, said the company "is happy American Greetings values the 150-year heritage of Gibson and the value of our brand in the marketplace."

Still, Lynam added that while he has "some respect for Gibson and in what [its products] can do for us, in terms of industrywide, I just see fewer supplier options all the time."