Hallmark Cards Inc. has agreed to acquire independent TV movie producer RHI Entertainment Inc. for $378 million, plus the assumption of $50 million in debt.
RHI, producer of the critically acclaimed "Lonesome Dove," will become a wholly owned subsidiary of the Kansas City, Mo.-based greeting card company, whose TV involvement mostly consists of its "Hallmark Hall of Fame" specials.
RHI, which has carved out a niche as a producer of family entertainment, is one of the few small, publicly owned suppliers of TV movies that have survived and remained profitable during a shakeout in the industry over the last several years. It reported after-tax profit last year of $4.8 million on revenue of $48.8 million.
The RHI sale will prove a lucrative payoff for the father-son team of Robert Halmi Sr., 70, and Robert Halmi Jr., 37, who collectively own about 12% of the company's common shares. They took RHI public in 1989 at $10 per share.
Halmi Sr. oversees the creative end of the business; his son is chief executive and runs the business side of the New York company.
On Tuesday, RHI's stock soared $9.125 a share to close at $35.625 on the American Stock Exchange.
Rumors that RHI might be sold began recently as its stock price rose on speculation that Turner Broadcasting System Inc., which recently acquired RHI shareholder New Line Cinema, would mount a bid for the production company.
"We had conversations with other folks, but Hallmark represents the best value for our shareholders and will stabilize the company and enable it to have similar growth of the last four years," Halmi Jr. said. "We also wanted a partner that would be a good fit."
RHI has produced nearly 70 projects--a mixture of made-for-TV movies and network miniseries--since 1989 and has orders for 35 projects this year. The Halmis each have five-year employment agreements with Hallmark.