Michaels Acquired by Apollo Global Management as Company Goes Private Once Again

By Thomas Price Thursday, March 4, 2021

After an initial struggle in the early stages of the COVID-19 pandemic, arts and crafts company Michaels found strong success in Q3 leading to significant interest from outside sources. This has now led to the company being acquired by private equity firm Apollo Global Management in a major business deal. The move will make the company a private business once again after being publicly traded for several years leading up to the deal. The arts and crafts company is still set to release a Q4 report this week.

Michaels storefront.

Details of the Business Deal

Following about a week of negotiations, the arts and crafts company was sold in a deal worth approximately $5 billion. Apollo Global Management plans to buy all outstanding shares of the company at a price of $22 a share. This is a whopping 47% premium on each individual share giving every former shareholder a strong return on their original investment.

The deal was unanimously approved by the Michael board of directors and UBS will serve as the exclusive financial advisor for the 25-day shopping period where the company will be able to exit the merger if a better business deal is proposed by a different private equity company.

The deal for the arts and crafts business is expected to close completely in the first half of the fiscal year. The financing for the transaction will be funded through a combination of equity directly from Apollo Global Management alongside a committed debt finance package. The finance package will be provided from a series of companies, including Credit Suisse, Barclays, Wells Fargo, RBC Capital Markets, Deutsche Bank, Mizuho, and Bank of America.

The deal will take Michaels private, after being a publicly-traded business since 2014. The arts and crafts company most recently reported a 15% increase in net sales in their Q3 earnings report bolstered by the transition to curbside pick up, delivery, and the increased interest in arts and crafts during the pandemic. Michaels plans to still release a Q4 report this week, though the investor conference call has been canceled following the news of the merger.

Future Outlooks for Michaels

While not much is currently known about what Michaels will look like as a private company, expectations are that current operations will continue as normal, with a similar focus though less beholden to shareholder anxieties and concerns.

When commenting on the business merger, Michaels CEO Ashley Buchanan said, “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. We are excited to enter into this new chapter together with Apollo, who shares our strategic vision for Michaels as an omnichannel retailer that offers a one-stop-shop experience for the entire Michaels community. As a private company, we will have financial flexibility to invest in, expand, and improve our retail and digital platforms.”

About the Author

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Tom Price is a writer focusing on entertainment and sports features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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