Retail

Crafts retailer Michaels will go private in $3.3 billion deal with Apollo Global

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Key Points
  • Arts and crafts retailer Michaels has agreed to be bought by the private equity firm Apollo Global Management for $3.3 billion.
  • Apollo will acquire all outstanding shares of Michaels stock at $22 per share.
Reusable shopping bags are displayed beneath a checkout counter at a Michaels craft store in Cincinnati, Ohio.
Luke Sharrett | Bloomberg | Getty Images

Arts and crafts retailer Michaels said Wednesday it agreed to be taken private in a $3.3 billion deal with Apollo Global Management.

Apollo will acquire all outstanding Michaels stock for $22 per share in a tender offer. That represents a 47% premium to the closing price on Friday, the day before speculation of the deal was publicized in the media. The companies value the transaction at $5 billion.

Michaels said the terms of the deal were unanimously approved by its board.

The companies said that there will be a 25-day "go-shop" period, starting Wednesday, where Michaels will be able to entertain other options, but this process won't necessarily lead to a better offer.

Michaels has over 1,200 stores in North America and roughly 44,000 employees.

This won't be the first time the retailer has retreated from the public markets. Private equity firms Bain Capital and Blackstone acquired Michaels in 2006, taking the company private in a deal worth over $6 billion. Michaels went public again in 2014.

"As a private company, we will have financial flexibility to invest in, expand, and improve our retail and digital platforms," Michaels Chief Executive Ashley Buchanan said in a statement Wednesday.

Apollo is betting the momentum Michaels has seen during the pandemic — with many Americans stuck at home, redecorating and searching for ways to entertain themselves — will continue. Michaels' sales during the third quarter rose 15% year over year, to $1.41 billion, while its online sales more than doubled.

The retailer said it will release its fourth-quarter results on Thursday, but it will no longer hold a conference call with analysts.

The deal with Apollo is expected to close during the first half of Michaels' fiscal year.

Michaels shares soared more than 22% trading following the news.

Read the full press release here.

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