Jostens Jumps After Investcorp Purchases It for About $850 Million

A restructuring, including 100 layoffs, will contribute to a charge in Jostens' fourth quarter.
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Updated from 8:54 a.m. EST

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Jostens

(JOS)

jumped 5 5/8, or 31%, to 23 15/16 in early morning trading on news the Minneapolis-based class ring and school yearbook manufacturer would be acquired by investment group

Investcorp

in a deal valued at about $850 million. (Jostens ended up 5 15/16, or 32%, to 24 1/4.)

Meanwhile, Jostens said in a separate statement that its fourth-quarter results would include a nonrecurring charge of about $20 million pre-tax or $13.2 million and 40 cents per diluted share after tax.

Jostens said the charge would stem in part from restructuring costs, including the elimination of 100 full-time positions. The company, which has 6,500 employees, said it would remove the positions of chief operating officer, vice president of consumer marketing and channel development and two vice presidents.

A company spokesperson was not immediately available for comment.

Under the terms of the deal with Investcorp, Jostens shareholders will receive $25.25 per share in cash, a 38% premium over Monday's closing share price of 18 5/16.

Investcorp will also assume about $100 million of Jostens' debt. Investcorp, which focuses on corporate investment, real estate investment and asset management, has completed over 50 corporate acquisitions and has an aggregate value of $14.5 billion. It has offices in New York, London and Bahrain.

Following the merger, Jostens will be 94% owned by Investcorp and other international co-investors, including

DB Capital Partners

, an affiliate of

Deutsche Bank

, and Jostens senior management.

Jostens, the leading marketer of commemorative school products, had sales of $769 million in the 12 months ended Oct. 2.

Completion of the transaction is subject to various approvals and conditions. Jostens shareholders are scheduled to vote on the merger in about 90 days, with the transaction to be completed immediately thereafter.

Jostens has agreed to pay Investcorp $19.125 million, plus up to $5 million in expenses if the agreement is terminated under certain circumstances, including a decision by Jostens to accept a more favorable acquisition proposal.

The deal was not expected, but it wasn't surprising either, said Jim Barrett, an analyst with

Josepthal & Co.

in New York. "It isn't surprising when you consider that the stock was going sideways and down for the last six years," he said. The stock has languished -- on Dec. 22, it hit its 52-week low of $17.25 -- while the company has sought ways to improve its meager growth, Barrett said. He projects top-line revenues to increase just 1% this year. Barrett rates the stock a buy, and his firm has not done any underwriting for Jostens.