December 23, 2009 (FinancialWire) — American Greetings Corp. (NYSE: AM) has formed a strategic alliance with Amscan, Inc., a designer, manufacturer and distributor of party goods based in Elmsford, New York.

As part of this transaction, American Greetings will sell to Amscan inventory, equipment and processes used in the manufacture and distribution of party goods. American Greetings said it will now source its party goods from Amscan, and will continue to distribute party goods to various channels, including to its mass, drug, grocery and specialty retail partners.

Amscan will have exclusive rights to manufacture and distribute products into various channels, including the party store channel. As a result of the strategic alliance, American Greetings said it will be able to offer a broader assortment of licensed and non-licensed party goods products to its retail partners.

American Greetings expects to receive cash of approximately $25 million and a warrant to purchase approximately 2% of the class A common stock of AAH Holdings, Amscan’s ultimate parent corporation.

As a result of this transaction, American Greetings will wind down its manufacturing of party goods products. American Greetings expects to incur non-cash asset impairment costs of approximately $10 million to $15 million.

In addition, American Greetings expects to incur facility related cash closure costs, primarily severance, in an amount that it said is still being quantified.

Management Comments

Cleveland-based American Greetings is a manufacturer and retailer of social expression products.

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