Michaels to be acquired for $3.3 billion

The Michaels Companies is being acquired in a deal that values the arts-and-crafts retailer at $5 billion.

Michaels said that it has entered into an agreement with private equity firm Apollo Global Management Inc. that will take the chain private. Apollo will acquire all outstanding shares of Michaels stock for $22 per share in cash, which represents a 47% premium to the closing stock price on Feb. 26. The deal has an equity value of $3.3 billion and a transaction value of $5 billion.

Michaels, which has more th an 1,275 stores in North America, said the terms of the deal were unanimously approved by its board.

“Our Michaels strategy and the work that we have done in the past year have led to phenomenal business results, strengthened our core business and positioned Michaels for long-term sustainable growth,” said Ashley Buchanan, CEO, Michaels. “As a private company, we will have the financial flexibility to invest in, expand, and improve our retail and digital platforms.”

Michaels’ sales have risen as Americans were mostly stuck at home during the pandemic. The chain’s third-quarter sales rose 15% year to $1.41 billion, while its online sales more than doubled.

Andrew S. Jhawar, senior partner and head of the retail and consumer group at Apollo, stated: “We believe there is a significant opportunity to enhance the Michaels brand, store experience and omnichannel offering to its customers across North America. Our team at Apollo expects to leverage many of the strategies from our funds’ successful investments in other specialty retailers and grocers with Michaels.” 

The deal, expected to close during the first half of Michaels’ fiscal year, will return the retailer to the private arena. Bain Capital and Blackstone acquired Michaels in 2006, taking it private in a deal worth more than $6 billion. The company went public again in 2014.

Shares of Michaels have risen nearly 300% over the past year, according to The New York Times.

By Marianne Wilson – 03/03/2021