Apollo Lines Up $4 Billion of Debt for Michaels Buyout
(Bloomberg) -- Apollo Global Management has obtained about $4 billion of debt commitments from banks to fund its leveraged buyout of crafting supplies retailer Michaels Cos., according to people with knowledge of the matter.
A group led by Credit Suisse Group AG is expected to start marketing the debt to institutional investors as soon as next month, assuming that Apollo’s bid is successful, the people said, asking not to be identified because the details are private.
The deal is one of only a few leveraged buyouts to materialize in the retail sector in recent years. Private equity firms have largely been reluctant to make big bets in an industry that has been upended by Amazon.com Inc. and, more recently, ravaged by the pandemic. The chain, however, has benefited from an increase in interest for arts and crafts among people stuck at home during the outbreak.
Apollo will contribute over $1 billion of equity from its own funds to finance the rest of the purchase, which values the retail chain at about $5 billion, one of the people said. The firm has offered $22 a share to existing shareholders, valuing their stake at around $3.3 billion, the companies said in a statement on Wednesday.
Representatives for Apollo and Credit Suisse declined to comment. A representative for Michaels didn’t immediately respond to a request for comment.
Like many retail chains, Michaels has attracted attention from private equity before. Bain Capital Partners and Blackstone Group Inc. took the company private in 2006 during a wave of buyouts that also included Toys “R” Us Inc. and Neiman Marcus Group Inc. Michaels returned to the public market with an IPO in 2014.
Financing will also be provided by Barclays Plc., Wells Fargo & Co., RBC Capital Markets, Deutsche Bank AG, Mizuho Financial Group Inc. and Bank of America Corp, the statement said.
©2021 Bloomberg L.P.