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IPO Report: The Michaels Companies (MIK)

By  +Follow June 26, 2014 3:34AM
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The Michaels Companies IPO, IPO, IPO report, The Michaels Companies IPO Report, IPOs today, stocks to buy nowThe Michaels Companies ($MIK) is a large arts and crafts specialty retailer, the largest in North America based on store count. It is headquartered in Irving, TX,

Fourteen other companies are scheduled for the week of June 23, 2014.  The complete IPO calendar is available at IPOpremium.

The manager and co-managers are J.P. Morgan, Goldman Sachs, Barclays, Deutsche Bank Securities, BofA Merrill Lynch, Credit Suisse, Morgan Stanley, and Wells Fargo Securities.  The joint managers are Guggenheim Securities, Macquarie Capital, Nomura, Piper Jaffray, Raymond James, Stephens, SunTrust Robinson Humphrey, Ramirez, Telsey Advisory Group, and The Williams Capital Group.

MIK scheduled a $500 million IPO with a market capitalization of $4.6 billion at a price range midpoint of $18 for Friday, June 27, 2014 on the Nasdaq. SEC filings

The Michaels Companies IPO Report

Overview

MIK is a large arts and crafts specialty retailer, the largest in North America based on store count.

48% of total Net sales in fiscal 2013, are only available at Michaels, under MIK's private brands.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing May 3 qtr

       

Michaels Companies (The) (MIK)

$3,654

0.9

19.9

-1.6

-1.3

14%

Jan 31 2014 yr

.

0.8

15.0

     

Conclusion

Consider these MIK stats:

Market cap:  $3.6 billion
Total debt:  $3.2 billion

Accumulated deficit: -$2.9 billion
Per share dilution to new IPO investors:  -$32.11

Price-to-tangible book value:  -1.3

It looks like a private-equity sponsored train wreck, but it's not because top line revenue is growing, up 5.9% for Q1 '14 vs Q1 '13, the P/E for the year ended January '14 is 15 and the corresponding price-to- sales ratio is .8.

Those are enough positives for institutions to add MIK to a segment of their portfolios.

The rating on MIK is neutral plus.

Business

MIK is a large arts and crafts specialty retailer

Largest in North American based on store count

With 1,263 stores (consisting of 1,145 Michaels stores and 118 Aaron Brothers stores) as of May 31, 2014 and $4.6 billion in sales in fiscal 2013, Michaels is the largest arts and crafts specialty retailer in North America based on store count.

MIK also operates a market-leading vertically-integrated custom framing business.

Arts & craft experience

With helpful store associates and a broad selection of merchandise combined with compelling in-store events and online content, MIK believes it offers the most complete arts and crafts experience and are the preferred destination in the industry.

MIK carries a broad and deep assortment of approximately 36,000 stock-keeping units ("SKUs") in arts, crafts, scrapbooking, floral, framing, home décor, seasonal offerings and children's hobbies that enable it to satisfy the diverse needs of its customers.

MIK has also developed a robust online platform which promotes social networking, and includes expert tips, project ideas, marketing content and information on upcoming store events.

In recent years, MIK has capitalized on its market-leading scale to create a team and infrastructure dedicated to designing, sourcing and delivering high quality, on-trend merchandise, including a growing number of products under its portfolio of private brands.

Private branded products

MIK’s private branded products, which represented approximately 48% of total Net sales in fiscal 2013, are only available at Michaels and allows MIK to further differentiate its merchandise while enhancing product margins.

MIK is also able to use its scale and market leadership to identify and secure exclusive third party products. MIK believes its compelling store experience and broad product offering distinguishes it from its competitors and position Michaels as the leading brand that defines arts and crafts.

Dividend Policy

No dividends are planned.

Competition

MIK competes with many different types of retailers and classifies its competition within the following categories:

Mass merchandisers: This category includes companies such as Wal-Mart Stores, Inc. (WMT) , Target Corporation (TGT) , and other mass merchandisers. These retailers typically dedicate only a small portion of their selling space to a limited selection of home décor, arts and crafts supplies, and seasonal merchandise, but they do seek to capitalize on the latest trends by stocking products that are complimentary to those trends and their current merchandise offerings. These mass merchandisers generally have limited customer service staffs with minimal amounts of experience in crafting projects.

Multi-store chains: This category includes several multi-store chains, each operating more than 100 stores, and comprises: Hobby Lobby Stores, Inc., which operates approximately 620 stores in 47 states; Jo-Ann Stores, Inc., which operates approximately 790 stores in 49 states; and A.C. Moore Arts & Crafts, Inc., which operates approximately 140 stores primarily in the Eastern United States. MIK believes all of these chains are significantly smaller than Michaels with respect to Net sales.

Small, local specialty retailers: This category includes local independent arts and crafts retailers and custom framing shops. Typically, these are single-store operations managed by the owner. These stores generally have limited resources for advertising, purchasing, and distribution. Many of these stores have established a loyal customer base within a given community and compete based on relationships and customer service.

Internet: This category includes all internet-based retailers that sell arts and crafts merchandise, completed projects and custom framing online. MIK’s Internet competition is inclusive of those companies discussed in the categories above, as well as others that may only sell products online. These retailers provide consumers with the ability to more easily search and compare products and prices compared to visiting a physical store. These sellers generally offer a wide variety of products but do not offer product expertise or project advice.

5% stockholders

Michaels Holdings LLC 92.9%  

Highfields Capital Management LP and related funds 6.2%

Use of proceeds

MIK expects to net $466 million from its IPO. Proceeds are allocated as follows:

to redeem $466 million of the Holdco Notes.

MIK also intends to use cash on hand to pay the applicable make-whole premium of $5 million (1% of the principal amount of the Holdco Notes being redeemed).

The Holdco Notes were issued in July 2013 and mature in August 2018. The interest rate on the Holdco Notes is 7.50% per annum with respect to cash interest and 8.25% per annum with respect to PIK Interest, which is the cash interest rate plus 75 basis points.

Net proceeds of the Holdco Note issuance were used to pay a cash dividend, distribution and other payments to its equity and equity award holders and pay related fees and expenses.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for MIK
ProVesting
30 Jan 15 16:51:04
$MIK: Michaels Companies Director Matthew S. Levin Sells 7659383 ...: http://t.co/GCiyW9DTe6
ProVesting
30 Jan 15 16:26:02
$MIK: Michaels Companies Director Sells $180148688.16 in Stock (MIK): http://t.co/geNWTFPhx3
Sleek Money
30 Jan 15 16:20:51
Michaels Companies Director Sells $180,148,688.16 in Stock $MIK http://t.co/TZCgWIPU0g
InsiderTradingWire
30 Jan 15 13:41:09
JOSHUA BEKENSTEIN Sells $180,148,688 Worth of $MIK The Michaels Comp - #Form4 #InsiderTrading - http://t.co/m1yW9AmlYD
InsiderTradingWire
30 Jan 15 13:40:45
Todd Cook Michael Sells $180,148,688 Worth of $MIK The Michaels Comp - #Form4 #InsiderTrading - http://t.co/LyvddmMvZm
InsiderTradingWire
30 Jan 15 13:40:22
CAPITAL BAIN INVESTORS LLC Sells $180,148,688 Worth of $MIK The Michaels Comp - #Form4 #InsiderTrading - http://t.co/2u3Y2Dq0jO
InsiderTradingWire
30 Jan 15 13:40:10
LEWIS KLESSEL Sells $180,148,688 Worth of $MIK The Michaels Comp - #Form4 #InsiderTrading - http://t.co/VIoUjpvciM
InsiderTradingWire
30 Jan 15 13:35:56
MATTHEW LEVIN S Sells $180,148,688 Worth of $MIK The Michaels Comp - #Form4 #InsiderTrading - http://t.co/fLdFqjlFaK
Insider Alerts
30 Jan 15 13:32:10
$MIK: New Insider Transaction on MIK by 10%+ Owner LEVIN MATTHEW S: http://t.co/IlQz2Mmc5j http://t.co/7BFGaQ2keU
TwentyOne
30 Jan 15 09:34:40
$MIK bouncing at the 9d/old breakout after two light volume consolidation days. constructive
Wyatt Research
30 Jan 15 07:25:44
Target Reaffirms Why It’s a Blue-Chip #Dividend Grower http://t.co/k2PuPQNqj4 $TGT $MIK $PEP #stocks
WKRB News
29 Jan 15 04:48:57
Blackstone Group Management L. Sells 11,122,800 Shares of Michaels Companies Stock $MIK http://t.co/9tq5tVEgK6
Sleek Money
28 Jan 15 16:36:58
Michaels Companies major shareholder Sells $251,152,824.00 in Stock $MIK http://t.co/gsQWesoZ4b
InsiderTradingWire
28 Jan 15 14:45:58
Management Blackstone Associates V L.L.C. Sells $251,152,824 Worth of $MIK The Michaels Comp - #Form4 ... - http://t.co/FJirpwXTrh
NASDAQ
28 Jan 15 14:40:28
$MIK - Statement of Changes in Beneficial Ownership (4) http://t.co/eNpuPP6PNE
InsiderTradingWire
28 Jan 15 14:40:17
Group Blackstone Management L.L.C. Sells $251,152,824 Worth of $MIK The Michaels Comp - #Form4 #InsiderTrading - http://t.co/qjOHhQdEpB
Insider Alerts
28 Jan 15 14:39:06
$MIK: New Insider Transaction on MIK by 10%+ Owner Blackstone Group Management L.L.C.: http://t.co/kV7KMU8Tm7 http://t.co/98nIe4iCA4
NewsTalk
28 Jan 15 14:21:31
RT @_JohnWalsh_: 28/1/15 Trend Trade Long Part 2 $EQY $FAF $FR $GGP $GLW $GXP $HDB $HIW $HR $HTA $INFA $IRWD $JNS $KIM $KR $KRC $LAMR $LPT …
US_proptrader
28 Jan 15 10:40:40
$AMPE $AREX $LC $LXK $MIK $SSNC $STAA $TSEM autocharts @ http://t.co/rTnYb8yj59
Bill Clegg
28 Jan 15 10:06:31
Former longs $MIK and $SWKS still rising without me. I need to be better at the hold.
US_proptrader
28 Jan 15 09:57:53
$AG $AU $BTU $HIMX $LNCO $LXK $MIK $NGD $TSEM autocharts @ http://t.co/rTnYb8yj59
StockNewsWires
28 Jan 15 05:36:13
$KRC $MIK: Stocks Buzz: Kilroy Realty Corp. (NYSE:KRC), The Michaels ...: http://t.co/0f0Eet7TVf
The Legacy News
28 Jan 15 04:42:24
Insider Selling: Philo Pappas Sells 96,851 Shares of Michaels Companies Stock $MIK http://t.co/umSVUn7YMr
The Z
28 Jan 15 04:18:37
Michaels, Ulta Beauty Help LeadSpecialty Retailers http://t.co/8k9qJR1UXS #IBDNews via @IBDinvestors $MIK $ULTA $LUX $INTC
The Ji
28 Jan 15 04:18:03
Michaels, Ulta Beauty Help LeadSpecialty Retailers http://t.co/IXXV5pXCB8 #IBDNews via @IBDinvestors $MIK $ULTA $LUX $INTC
Chimp
27 Jan 15 21:20:51
RT @_JohnWalsh_: 28/1/15 Trend Trade Long Part 2 $EQY $FAF $FR $GGP $GLW $GXP $HDB $HIW $HR $HTA $INFA $IRWD $JNS $KIM $KR $KRC $LAMR $LPT …
Mr. Breakout
27 Jan 15 20:14:14
TY for the RT > @is_matrix re: Mr. Breakout's Technical Favorites ►►► http://t.co/QmNA5og4Mm including $MIK $UVE etc...
Julian Park
27 Jan 15 19:16:19
RT @IBDinvestors: Retail Stocks: Italian sunglasses king, Luxottica, eyes "smart technology" market w/ Intel http://t.co/iAu2Yyjw0M $LUX $U…
Sicarius
27 Jan 15 19:08:18
RT @sharptraders: Mr. Breakout's Technical Favorites ►►► http://t.co/QmNA5og4Mm including $MIK $UVE etc...
TheRealAlexCurry
27 Jan 15 19:05:38
RT @IBDinvestors: Retail Stocks: Italian sunglasses king, Luxottica, eyes "smart technology" market w/ Intel http://t.co/iAu2Yyjw0M $LUX $U…
John nyika
27 Jan 15 19:02:41
RT @IBDinvestors: Retail Stocks: Italian sunglasses king, Luxottica, eyes "smart technology" market w/ Intel http://t.co/iAu2Yyjw0M $LUX $U…
Investors.com
27 Jan 15 19:01:06
Retail Stocks: Italian sunglasses king, Luxottica, eyes "smart technology" market w/ Intel http://t.co/iAu2Yyjw0M $LUX $ULTA $MIK
Mr. Breakout
27 Jan 15 18:58:54
Mr. Breakout's Technical Favorites ►►► http://t.co/QmNA5og4Mm including $MIK $UVE etc...
Mr. Breakout
27 Jan 15 18:39:09
Today's MoMo (Momentum) ►►► http://t.co/fzBYOLm5Bs including $PAYC $RDUS $ADXS $MIFI $ZIOP $MIK etc...
Harris Market Trends
27 Jan 15 18:35:32
Watch List for 1-28 $KITE $MIK $SMCI $ABC $PAYC $AAPL $MELI $MYL $MMM
Kate
27 Jan 15 18:04:31
RT @_JohnWalsh_: 28/1/15 Trend Trade Long Part 2 $EQY $FAF $FR $GGP $GLW $GXP $HDB $HIW $HR $HTA $INFA $IRWD $JNS $KIM $KR $KRC $LAMR $LPT …
David Hegedus
27 Jan 15 17:56:28
Retailers Starbucks, Lululemon Again Hit New Highs http://t.co/WxWFSd1nCR #IBDNews via @IBDinvestors $SBUX $LULU $MIK $AOS $CTCT $CSTE
World News Report
27 Jan 15 17:34:08
RT @IBDinvestors: New Highs: $SBUX $MIK and $LULU hit new highs, as $CSTE closes just below buy point http://t.co/CQqQPS1uua http://t.co/NG…
TheRealAlexCurry
27 Jan 15 17:31:44
RT @IBDinvestors: New Highs: $SBUX $MIK and $LULU hit new highs, as $CSTE closes just below buy point http://t.co/CQqQPS1uua http://t.co/NG…
Swing Trade Alert
27 Jan 15 17:14:28
IBD:New Highs: $SBUX $MIK and $LULU hit new highs, as $CSTE closes just below buy point http://t.co/qYcivZfzsY http://t.co/vurgKcistO
Investing Insight
27 Jan 15 17:07:23
IBDinvestors: New Highs: $SBUX $MIK and $LULU hit new highs, as $CSTE closes just below buy point … http://t.co/oa3tFhiW3a
LT
27 Jan 15 17:02:57
RT @IBDinvestors: New Highs: $SBUX $MIK and $LULU hit new highs, as $CSTE closes just below buy point http://t.co/CQqQPS1uua http://t.co/NG…
Investors.com
27 Jan 15 17:01:31
New Highs: $SBUX $MIK and $LULU hit new highs, as $CSTE closes just below buy point http://t.co/CQqQPS1uua http://t.co/NG6YAHRACh
IBD Radio Show
27 Jan 15 17:01:31
New Highs: $SBUX $MIK and $LULU hit new highs, as $CSTE closes just below buy point http://t.co/wUim8VbJCf http://t.co/JdSntQhllg
ProVesting
27 Jan 15 16:56:04
$MIK: Michaels Companies EVP Philo Pappas Sells 96851 Shares (MIK): http://t.co/14mER5zDhm
WKRB News
27 Jan 15 16:46:05
Michaels Companies EVP Philo Pappas Sells 96,851 Shares $MIK http://t.co/OV1KeamS9a
BlackCabbieTrader
27 Jan 15 16:35:50
28/1/15 Trend Trade Long Part 2 $EQY $FAF $FR $GGP $GLW $GXP $HDB $HIW $HR $HTA $INFA $IRWD $JNS $KIM $KR $KRC $LAMR $LPT $MIK $MO $NNN $O
StockNewsWires
27 Jan 15 16:26:02
$MIK: Insider Selling: Philo Pappas Sells 96851 Shares of Michaels ...: http://t.co/WRfddf7LqO
Sleek Money
27 Jan 15 16:20:42
Insider Selling: Philo Pappas Sells 96,851 Shares of Michaels Companies Stock $MIK http://t.co/4b8NdVBSIv
SwingTradeBot
27 Jan 15 15:01:26
Scan results - New 52 Week High today: $INFA $AOS $WAT $PLD $IMAX $CTCT $TEL $GLW $RDUS $MIK ... http://t.co/XMMw8ez66T
				
				
By  +Follow June 26, 2014 3:34AM
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