Michaels Stores Files for an IPO

Arts and crafts retailer's deal should see plenty of demand

   

Michaels Stores, which is a major retailer of arts and crafts, has filed the necessary papers for an IPO. The lead underwriters include JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), Barclays (NYSE:BCS) and Bank of America Merrill Lynch (NYSE:BAC). The company plans to list on the NYSE with the ticker “MIK.”

Michaels Stores got its start back in 1976. But it was not until the early 1980s — when Sam and Charles Wyly bought majority control — that the company began its growth spurt. Now. Michaels has 1,066 stores in 49 states and Canada, and the company also owns the Aarons Brothers chain.

Last year, the company generated a hefty $661 million in EBITDA, and sales were $4.21 billion, which included same-store sales growth of 3.2%. The company expects to add 50 new locations this year.

Michaels previously traded publicly before being sold for $6 billion and going private in 2006. The private equity sponsors included the Blackstone Group (NYSE:BX) and Bain Capital. As a result, the company took on a huge slug of debt. And that debt still is at $3.49 billion, so you can expect a key use of the IPO proceeds will be to pay that sum down, rather than to go toward growth.

Still, this might not be much of an issue. The surge in the stock market has helped foster some strong demand for IPOs — including those backed by private equity firms. Just look at Dunkin’ Brands (NASDAQ:DNKN). In July, the company raised $423 million in its IPO, then last week was able to sell $896 million in stock with a secondary offering.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”“All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/michaels-stores-files-for-an-ipo/.

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