Michaels Companies Inc (MIK) IPO Performance Explored By Seema Mody


Michaels Companies Inc (NASDAQ:MIK) has just relisted after spending eight years as a private company and CNBC’s Seema Mody has analyzed the company’s initial public offering performance in a report on CNBC.

According to the CNBC contributor, Michaels Companies Inc (NASDAQ:MIK) is the largest arts and crafts retailer in the U.S. Its stock, however, was priced at the low end of its range for the IPO at $17 per share, Mody noted. The stock, Mody added, is currently trading just above its offer price.

Michaels Companies, is Michaels Companies a good stock to buy, Seema Mody, Bain Capital LLC, The Blackstone Group L.P.

Mody also added that the company, based in Irving, Texas, was taken private by Bain Capital LLC and The Blackstone Group L.P. (NYSE:BX) in 2006. The two private equity firms, she said, paid roughly $6 billion to take Michaels Companies Inc (NASDAQ:MIK) private. The two firms also now currently own 80% of the company after the IPO.

After its relisting, Michaels Companies Inc (NASDAQ:MIK) has raised about $470 million in capital. This will be used, the CNBC contributor said, to pay down debt. The company’s latest hit product is its Rainbow Loom kit, Mody added. However, it has to be seen whether investors will have appetite for the company’s stock, she said.

As of the end of May, Michaels Companies Inc (NASDAQ:MIK) operates 1,145 Michael’s stores and 118 Aaron Brothers stores in the U.S. The company is the biggest specialty arts and crafts retailer by number of stores in North America.

Lead underwriters for the IPO were Goldman, Sachs & Co and J.P. Morgan Securities LLC while other underwriters included Barclays Capital Inc; BofA Merrill Lynch; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc; Guggenheim Securities, LLC; Morgan Stanley & Co. LLC; Nomura Securities International, Inc; Piper Jaffray & Co.; and Wells Fargo Securities, LLC among others.

In the years it was private, Bain Capital LLC and The Blackstone Group L.P. (NYSE:BX) built up the arts and crafts retailer’s online presence helping sell more of the company’s self-branded exclusive products which made about half of the company’s sales during last year’s fiscal year. Michaels Companies Inc also has a framing business which it operates in its locations.

Bain Capital LLC and The Blackstone Group L.P. (NYSE:BX) outbid the group made up of Kohlberg Kravis Roberts and TPG Capital in 2006 to buy the then 900-store firm. The deal was reflective of the market taking advantage of cheap debt at the time to do leveraged buyouts.


Disclosure: None