Michaels craft stores go private again, for $ 5 billion

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Arts and crafts retailer Michaels companies (NASDAQ: MIK) becomes private again. This time it is acquired by Global management of Apollo (NYSE: APO) for $ 22 per share, or $ 5 billion.

That’s $ 1 billion less than the last time it was private, in 2006 by Bain Capital, and it represents the struggle the retailer has faced since returning to the public market eight years later at a price of $ 17. per share.

Image source: Getty Images.

Design a new buyout

Apollo’s offer represents a premium of 47% over the price at which the stock was trading on February 26, the day before speculation on its buyback erupted, but also a premium of 78% over the price. 90-day volume-weighted average.

Michaels has 25 days to research a better deal and accept it without penalty, but the craft store has had a haphazard run since going public in 2014.

Even then, there wasn’t much enthusiasm for his business, and his private equity owners ended up pricing the stock at the lower end of the expected range.

Apollo apparently believes he can help the arts and crafts retailer better turn around its operations. Michaels Chairman of the Board, James Quella, said in a statement: “The impressive transformation in the growth of the company, including our financial and operational performance in the unprecedented pandemic environment, has led to an unsolicited offer to buy the company. “

Yet the same issues of a highly competitive marketplace and the even greater challenge of e-commerce could pose a problem. But private equity firms don’t go into investments with a view to holding them for the long term, so the likelihood of Michaels going public again is high.

This is the second major acquisition announced today by Apollo; he also bought the Las Vegas operations of the casino operator Sands of Las Vegas (NYSE: LVS) for $ 6.3 billion.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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