Hallmark Inc., has proposed buying the nearly 10% of Hallmark Channel parent Crown Media Holdings it doesn’t already own in a deal valued at $175 million. If completed, the deal would effectively take public traded Crown private.
In a filing with the Securities and Exchange Commission, Hallmark said it has decided to purchase the remaining interest in Crown for $5.05 per share, a 2.4% premium to its $4.93 per share price on March 8.
Investors appeared pleased, driving Crown shares above the offering price on Wednesday – the stock was priced at $5.10 each at 11:30 a.m.
Hallmark has had a rocky relationship with minority shareholders over the years. In 2009, minority shareholder S. Muoio & Associates sued the card company after it proposed a recapitalization plan that gave Hallmark a 90.3% interest in the programmer. That suit was dismissed in 2011.
Hallmark would complete the purchase through a short-form merger process which it says will give minority shareholders better liquidity and allow Hallmark to realize benefits from its ownership of Crown that are unavailable to it while Crown remains a public company with minority stockholders. Following the merger, Hallmark said it intends to operate Crown and use its own Hallmark brand to strengthen the TV brand across all of the Hallmark businesses.
“Hallmark also intends to strengthen the link between Crown’s channels and Hallmark’s businesses,” the company said in a statement. “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.”
As the owner of 90.3% of Crown, Hallmark said it does not need the approval or the board or of minority shareholders to complete the deal. The company said it intends to keep Crown Media’s existing management.
