Bain’s Michaels Seeks Up to $528 Million in Initial Offering

Michaels Cos., the arts and crafts retailer backed by Bain Capital Partners LLC and Blackstone Group LP (BX), is seeking as much as $528 million in its U.S. initial public offering.

Michaels is offering 27.8 million shares at $17 to $19 each, according to a regulatory filing today. The IPO is being managed by JPMorgan Chase & Co. and Goldman Sachs Group Inc., the filing shows.

Michaels was acquired by Bain and Blackstone in 2006 for about $6 billion, and each firm will own 40 percent of the company after the offering, according to the filing. At the high-end of the price range, Michaels would have a market value of about $3.9 billion, based on 203.1 million shares outstanding. Including debt, Michaels would have an enterprise value of $7.1 billion, data compiled by Bloomberg show.

Private-equity firms have had a difficult time exiting the brick-and-mortar retailers they picked up during the buyout boom that ended in 2007, as sales growth slowed when consumers shifted to online shopping. However, Bain-backed Burlington Stores Inc. debuted in October, raising $261 million including an overallotment. Shares of the retailer have since surged 79 percent.

Michaels, based in Irving, Texas, has 1,263 stores under the Michaels and Aaron Brothers brands, and generated about $4.6 billion in sales in the year through Feb. 1, 2014, the filing shows. Net sales increased 3.7 percent in the most recent fiscal year, driven by comparable store sales growth and the opening of 56 more outlets, according to the filing. Michaels is profitable, posting $243 million in net income last year, a 22 percent jump from the previous year.

Michaels plans to use the proceeds from the offering to repay debt. The company says it is the largest arts and crafts specialty retailer in North America based on store count.

Michaels intends to list its shares on the Nasdaq Stock Market under the symbol MIK.

To contact the reporters on this story: Mohammed Hadi in New York at mhadi1@bloomberg.net; Leslie Picker in New York at lpicker2@bloomberg.net

To contact the editors responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net Elizabeth Wollman, James Callan

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