Kansas City-based Hallmark Cards said Wednesday that it intends to acquire all of Crown Media Holdings’ outstanding common stock, which means that Hallmark would take Crown Media private.
The announcement from Donald J. Hall Jr., chief executive officer of Hallmark Cards, indicated that acquiring sole ownership of its Crown Media subsidiary would cost about $175 million.
Hallmark already owns about 90 percent of Crown Media, which is based in Studio City, Calif., and operates the Hallmark Channel.
The acquisition price would be $5.05 a share, or 2.4 percent higher than Crown Media’s closing price on Tuesday. Crown Media has about 360 million shares outstanding.
Hallmark said it intends to operate Crown Media to strengthen use of the Hallmark brand across all Hallmark businesses. The company also said that taking Crown Media private would reduce costs associated with operating a public company.
Hallmark delivered a letter Tuesday to the Crown Media board of directors indicating its intent to operate Crown Media as a new, wholly owned subsidiary. No consent from Crown Media directors is required.
With the change, “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,” the letter said.
The complete acquisition also would allow Hallmark “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,” the letter said.
Hallmark retains the right to abandon the transaction before completion.
Crown Media recently reported a smaller fourth quarter profit but rising revenue that included gains in advertising and subscriber fees. The company had net income of $38.9 million in the three months that ended Dec. 31, while revenue climbed 18 percent to $158.8 million from the final quarter of 2014.