Private Equity Firm Acquires Michaels in $5 Billion Deal

Private equity giant Apollo Global Management is acquiring arts and crafts retailer Michaels in a $5 billion deal.

Apollo will buy all outstanding Michaels shares for $22 each — a 47% premium to Friday's closing stock price, and well above the stock's pandemic-era low of around $1.

Michaels, which operates more than 1,250 stores in the United States and Canada, was hit hard last spring when the pandemic forced it to shutter locations temporarily. But as restrictions eased over the summer, the arts and crafts industry boomed.

"Sales of everything from embroidery kits to drawing accessories to woodworking tools are up over last year as Americans look for new ways to occupy their time and soothe their nerves," Neil Saunders, managing director of analytics company GlobalData, said.

Michaels has also implemented new strategies including adding curbside pick-up and same-day delivery. Saunders says Apollo will "benefit from the recent investments Michaels has made in its online proposition."

The deal was approved unanimously by Michaels' board, the company said in a press release Wednesday.

"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.

"As a private company, we will have financial flexibility to invest in, expand, and improve our retail and digital platforms," Ashley Buchanan, the CEO of Michaels, added.

Michaels shares soared more than 22% on the news Wednesday.

The company reported a net sales increase of 15% to $1.4 billion in its third quarter, and it will report fourth-quarter results Thursday.