Michaels Craft Stores goes private again, for $5 billion

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

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

Image source: Getty Images.

Design a new buyout

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

Michaels has a 25-day shopping period during which he can search for a better deal and accept it without penalty, but the craft store has had a bumpy ride since its IPO in 2014.

Even then, there wasn’t much enthusiasm for his company, 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 get its operations back on track. Michaels Chairman of the Board, James Quella, said in a statement, “The company’s impressive growth transformation, including our financial and operational performance in the unprecedented pandemic environment, has driven 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 the intention of keeping them long-term, so the likelihood of Michaels going public again is high.

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

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Rich Duprey has no position in the stocks mentioned. The Motley Fool recommends The Michaels Companies. The Motley Fool has a disclosure policy.

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