American Greetings sells retail business

Cleveland American Greetings Corp. has agreed to sell its retail business to Schurman Fine Papers, which operates card and gift retail stores under the name Papyrus. Schurman will operate stores under the American Greetings, Carlton Cards, and Papyrus brands.

As part of the deal, American Greetings has purchased the wholesale division of Schurman, which supplies the Papyrus brand primarily to leading specialty, mass, grocery and drug store channels. American Greetings will become responsible for service to those accounts where Papyrus brand products are sold. The companies have entered into mutual transition services agreements in addition to ongoing commercial licensing, supply, and marketing agreements.

American Greetings paid approximately $18 million dollars as consideration for the wholesale division of Schurman. Schurman paid American Greetings approximately $6 million for its retail business. American Greetings also paid approximately $2 million for a 15% equity interest in Schurman. In connection with the transaction, American Greetings will provide limited credit support to Schurman.

American Greetings was hit hard by the economic downturn in the fall and reported in late December a net loss of $177.6 million during its first three fiscal quarters, compared with net income of $67.4 million in the prior-year period. The company reports its fiscal fourth quarter and full-year results on April 28.