The Michaels Companies announced Wednesday that it is being acquired by the private equity firm Apollo Global Management. The transaction is valued at $5 billion, while Michaels holds an equity value of $3.3 billion.
The purchase price for the Texas-based arts and crafts retailer, $22.00 per share in cash, represents a 47% premium to the company’s closing price last Friday, before the possibility of a sale began to receive attention in the media.
Michaels GC Tim Cheatham tapped New York-based Ropes & Gray to advise Michaels on the transaction. UBS Investment Bank was its financial advisor.
Simpson Thacher & Bartlett and Paul, Weiss, Rifkind, Wharton & Garrison provided legal advice to Apollo Global. Credit Suisse was its financial advisor. There were no lawyers from Texas involved.
The Simpson Thacher team was led from Los Angeles by corporate partners Gregory Klein and Michael Kaplan, along with associates Daniel Switts and Claire Hutar. Pitching from Palo Alto were were Mark Myott, and Megan Whitman.
Like most brick-and-mortar retailers, Michaels has been under tremendous pressure for the past several years; first, because of the challenges borne by online competition, then by a global pandemic that accelerated that process.
“The Company’s impressive growth transformation, including our financial and operational performance in the unprecedented environment of the pandemic, led to an unsolicited offer to buy the company,” said James Quella, Chairman of the Michaels Board of Directors, in a statement.
Upon the completion of the transaction, Michaels will become a privately held company and shares of MIK common stock will no longer be listed on any public market.
The company currently operates 1,275 stores in 49 states and Canada with custom framing operations along with the sale of craft supplies.
New York-headquartered Apollo Global manages $455 billion in assets through at least 15 offices worldwide, including a major office in Houston.