Hallmark Cards said it intends to acquire the 10% of Crown Media Holdings it doesn’t already own for $175 million, according to a filing with the SEC.
Crown Media, which operates the Hallmark cable TV channels, will become part of a privately held company at $5.05 a share, slightly above the stock’s closing price Tuesday.
Hallmark said a letter informing Crown about the transaction was delivered to Crown Media’s directors on Tuesday. “Hallmark has confidence in the company’s current management and they will continue to lead the Company and its employees and manage the day to day operations at its current office locations.”
The story was first reported by the Wall Street Journal.
In the past two years, Crown’s shares have doubled as the company increased ad revenue by launching a series of successful original family-friendly shows.
Crown’s minority shareholders have often complained that while the company’s operations have improved, their stock holdings have not appreciated as much as they’d like. Going private buys out the minority shareholders.
In the letter, Hallmark Cards said it “intends to operate Crown, and its use of the highly recognized Hallmark brand in the entertainment industry, to strengthen the Hallmark brand across all of the Hallmark businesses. Hallmark also intends to strengthen the link between Crown’s channels and Hallmark’s businesses.”
With Crown as a wholly-owned subsidiary, “Hallmark will be able to control Crown’s content decisions and potential monetization paths, and will have greater flexibility to respond to the many risks and challenges of the rapidly changing cable and entertainment landscape and protect its substantial investment in Crown,” Hallmark said.
“Hallmark will be able to direct Crown’s business and make all of those decisions in light of what is best for Hallmark as a whole, without being constrained by public, minority stockholders at Crown. Hallmark also anticipates a decrease in costs over time associated with being a public company, and the elimination of burdens on Crown’s management associated with public reporting and other tasks resulting from Crown’s public company status,” the letter said.
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