Shares of Michaels Companies Inc. (NASDAQ: MIK) pulled back slightly after the company announced a secondary offering. The selling stockholders intend to offer 12 million shares, with an overallotment option for an additional 2 million shares. No pricing details were given at this point, and the company itself will not be selling any shares.
The sole underwriter for the offering is Credit Suisse.
This company is North America’s largest specialty provider of arts, crafts, framing, floral, wall décor and seasonal merchandise for the hobbyist and do-it-yourself home decorator. As of October 29, 2016, Michaels owned and operated 1,368 stores in 49 states and Canada under the brands Michaels, Aaron Brothers and Pat Catan’s.
The Michaels Companies also owns Artistree, a manufacturer of high-quality custom and specialty framing merchandise, and Darice, a premier wholesale distributor in the craft, gift and decor industry.
Private branded products, which represented roughly 53% of total net sales in fiscal 2015, are only available at Michaels or certain exclusive partners and allow Michaels to further differentiate its merchandise while enhancing product margins.
The company detailed in the filing:
Following the completion of this offering, investment funds affiliated with or advised by Bain Capital Private Equity, LP and The Blackstone Group L.P. (collectively, together with their applicable affiliates, the “Sponsors”) will no longer indirectly beneficially own a majority controlling interest in us. As a result, we will no longer be able to avail ourselves of the controlled company exemption under the rules of The NASDAQ Stock Market.
As mentioned, the company will not receive any proceeds from the offering.
So far in 2016, Michaels stock has remained relatively flat and underperformed the broad markets, with the stock up only about 1%.
Shares of Michaels were trading down about 0.5% at $22.55 on Tuesday, with a consensus analyst price target of $28.54 and a 52-week trading range of $19.46 to $31.36.
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