Arts and crafts retailer Michaels said Wednesday it agreed to be sold to private equity giant Apollo Global Management for $22 a share in a transaction valued at $5 billion.
The offer to shareholders represents a 47% premium to a week ago, before speculation of a pending sale pushed up the stock price, Michaels said. The retailer’s board approved the take-private deal, which is expected to close in the first half of the year after Apollo’s purchase of shares from investors.
The price of the new offer values the Irving-based company, which is the largest arts and crafts retailer, at $3.3 billion.
Michaels said the transaction will be financed through a combination of equity provided by Apollo and a debt financing package from Credit Suisse, Barclays, Wells Fargo, RBC Capital Markets, Deutsche Bank, Mizuho and Bank of America.
Those details haven’t been filed yet. Private equity’s track record with its leveraged buyouts hasn’t always been a successful formula for retail companies, as large interest payments and fees wipe out profits and cash needed to invest in the business.
Michaels’ most recent financial statements from October show it had $852 million in cash and debt of $2.48 billion.
Once the company received the offer, Michaels chairman James Quella said the board “undertook a comprehensive process to test the market and to evaluate the value-maximizing path forward for shareholders.” Directors concluded the offer was “a compelling value” for shareholders.
CEO Ashley Buchanan joined the company right before the pandemic in early 2020. He and the management team came up with a new strategy to drive business during a challenging retail environment, Quella said.
Read the full story at Dallas Morning News.
