Factory Card & Party Outlet to be acquired

Factory Card & Party Outlet will be acquired by AAH Holdings Corp. in an all-cash transaction valued at about $72 million, the companies announced today.

The transaction has been approved by the boards of both companies.

Under the terms of the merger agreement, a subsidiary of AAH will commence a tender offer for all outstanding shares of Factory Card & Party Outlet stock at a price of $16.50 per share in cash within 10 business days. Shares not purchased pursuant to the tender offer, other than dissenting shares, will be acquired in a subsequent merger at a price of $16.50 per share in cash, without interest, as soon as practicable after completion of the tender offer.

The board of Naperville-based Factory Card & Party Outlet has recommended its stockholders accept the offer.

"This offer creates outstanding value for our shareholders and enables our management and talented associates to continue our successful retailing strategy," said Gary Rada, 53, president and chief executive officer of Factory Card & Party Outlet, in a statement. "This reflects the strength of Factory Card & Party Outlet's brand, unique mix of social expressions and party supply merchandise, strong customer relationships, and extensive store network. We are especially pleased that we have the opportunity to build upon these assets as we join an entity that understands the party supply industry and can bring us extensive creative solutions, sourcing expertise and financial resources to further grow our business."

Commenting on the transaction, Gerry Rittenberg, 55, chief executive officer for AAH, said in a statement, "The addition of Factory Card & Party Outlet to the AAH family offers a unique opportunity to add another retail brand to our portfolio. (Factory Card & Party Outlet) provides a distinctive assortment of social expressions products to a segment of the consumer market not generally served by our existing retail base."

Founded in 1989, Factory Card & Party Outlet sells social expressions and party supply merchandise, including greeting cards, gift wrapping, ribbon, party supplies, balloons and novelty and celebratory items for birthdays, holidays and other festive occasions. It has 184 stores in 19 states, chiefly in the Midwest and Mid-Atlantic states, and has about 2,700 employees.

AAH Holdings Corporation, a Elmsford, N.Y.-based company owned by Berkshire Partners, Weston Presidio and AAH management, designs, manufactures, and distributes party goods, including paper and plastic tableware, metallic balloons, accessories, novelties, gifts and stationery. AAH's retail division currently operates more than 428 company-owned stores and has about 330 franchise stores in the U.S. After giving effect to the acquisition, AAH's operating units will have annual sales of about $1.4 billion. Including the sales of franchisee-owned stores, total network sales will be about $2 billion.

AAH also operates a division of temporary Halloween stores operating as Halloween USA.