Michaels is Sold for $6 Billion

Private Equity Group to Take Over Irving-based
Arts and Crafts Retailer

The Dallas Morning News
July 1, 2006


The board of Michaels Stores Inc., the nation's largest arts and crafts retailer, ended months of speculation Friday by accepting a takeover bid from private equity firms Bain Capital LLC and Blackstone Group in a deal valued at about $6 billion.

The winning bid for the Irving-based retailer was $44 a share - a premium of nearly 30 percent above the closing price before the company announced March 20 that it was putting itself on the auction block.

"This price was a little above what Wall Street was expecting," said Stephens Inc. analyst Dennis Telzrow. "I had a $42-per-share expectation, and that was one of the highest on the street, so obviously this is a good price for shareholders."

Wall Street was abuzz with rumors and speculation about the deal, which pushed Michaels shares higher from the opening bell Friday, as a deal seemed imminent.

The stock closed up $3.24 at $41.24, an 8.5 percent gallop, as 5.6 million shares changed hands. That was more than three times the average trading volume.
Mr. Telzrow said the stock would probably move close to the $44 bid when trading resumes Monday.

Bain Capital, a Boston-based investment firm, and New York-based Blackstone will own equal stakes.

The board also considered a bid from Fort Worth-based Texas Pacific Group, which partnered with Kohlberg Kravis Roberts & Co.

"Our deep experience in the retail sector reinforces our conviction that Michaels has the best store locations, a broad assortment of products for crafters and a sustainable competitive advantage," said Matt Levin, a managing director at Bain.

He provided no details on the group's plans for Michaels and its management.
Michaels operates 900 Michaels stores, 165 Aaron Brothers stores and 11 Recollections outlets.

It topped $3.68 billion in revenue last year.

Charles Wyly, chairman of Michaels, said in a written statement that the deal was an outstanding value for its shareholders.

Mr. Wyly and his brother, Sam Wyly, own about 5 percent of the company, making their stake worth about $320 million.

The sale must be approved by shareholders.