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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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for MIK
BreakingStocksNews
26 Mar 15 05:25:02
$MIK: Michael J. Veitenheimer Sells 50000 Shares of Michaels ...: http://t.co/5wkrmoQdlj
Breaking News
26 Mar 15 04:50:03
$MIK: Insider Selling: Thomas C. Decaro Sells 200227 Shares of Michaels ...: http://t.co/ozCT5pN2EI
WKRB News
26 Mar 15 04:48:09
Insider Selling: Thomas C. Decaro Sells 200,227 Shares of Michaels Companies Stock $MIK http://t.co/Qov1ZvZAVm
ProTradersNews
26 Mar 15 04:45:04
$MIK: Insider Selling: Thomas C. Decaro Sells 329873 Shares of Michaels ...: http://t.co/IadtKpb6m6
Breaking News Now
25 Mar 15 20:30:02
$MIK: Insider Selling: Michaels Companies EVP Thomas C. Decaro Sells ...: http://t.co/Ab91OEtY2h
Sleek Money
25 Mar 15 20:20:29
Insider Selling: Michaels Companies EVP Thomas C. Decaro Sells 329,873 Shares of Stock $MIK http://t.co/I4koRQs9cM
Breaking News Now
25 Mar 15 20:20:02
$MIK: Insider Selling: Michaels Companies EVP Thomas C. Decaro Sells ...: http://t.co/TrEY56F5Lj
US Banking News
25 Mar 15 19:40:42
Michaels Companies EVP Sells $5,946,741.90 in Stock $MIK http://t.co/ZRR4P4E38i
US Banking News
25 Mar 15 19:40:42
Insider Selling: Michaels Companies EVP Sells 329,873 Shares of Stock $MIK http://t.co/iBMl0wqOy3
The Legacy News
25 Mar 15 19:27:09
Insider Selling: Michaels Companies EVP Sells 329,873 Shares of Stock $MIK http://t.co/XVW6hHHN6w
StockNewsWires
25 Mar 15 19:20:03
$MIK: Michaels Companies EVP Sells $5946741.90 in Stock (MIK): http://t.co/h6icbpLlNV
Breaking News
25 Mar 15 19:20:03
$MIK: Insider Selling: Michaels Companies EVP Sells 329873 Shares of ...: http://t.co/ERtfvNOoes
InsiderTradingWire
25 Mar 15 15:50:09
THOMAS DECARO C EVP-Supply Chain Sells $8,129,478 Worth of $MIK The Michaels Companies, Inc. - #Form4 ... - http://t.co/5WHtSedNAM
Sleek Money
25 Mar 15 14:05:14
Insider Selling: Michaels Companies SVP Michael J. Veitenheimer Sells 50,000 Shares of Stock $MIK http://t.co/Hg0CDXjumJ
StockNewsWires
25 Mar 15 13:55:05
$MIK: Insider Selling: Michaels Companies SVP Michael J. Veitenheimer ...: http://t.co/XBPKNZXatE
BreakingStocksNews
25 Mar 15 13:50:03
$MIK: Insider Selling: Michael J. Veitenheimer Sells 50000 Shares of ...: http://t.co/cIXipb7dIP
The Legacy News
25 Mar 15 13:24:04
Insider Selling: Michael J. Veitenheimer Sells 50,000 Shares of Michaels Companies Stock $MIK http://t.co/izk0rik3p8
Penny Stock Secret
25 Mar 15 11:25:11
Yesterday We Made $94,000 In Just One Trade More Info Here http://t.co/NovWYe2RAx .. $MIK $UHAL $AFFX
NASDAQ
25 Mar 15 09:31:08
$MIK - Statement of Changes in Beneficial Ownership (4) http://t.co/9d9sgQr4Gl
InsiderTradingWire
25 Mar 15 09:30:28
MICHAEL VEITENHEIMER J SVP -Chief Legal Officer & Sec Sells $1,318,500 Worth of $MIK The Michaels Companies, ... - http://t.co/Yhrclu6hyw
Insider Alerts
25 Mar 15 09:28:07
NEW insider transaction on $MIK reported a moment ago: http://t.co/gmZ8wxVoXI
Daily Contracts
25 Mar 15 08:02:01
Real-Time feed of company contracts, original agreements and executive updates from $MIK http://t.co/sVkawA8bSH
NASDAQ
25 Mar 15 03:16:07
$MIK - Michaels: A Big 2015 Is Ahead http://t.co/6j5j9wxnpy
ProTradersNews
25 Mar 15 03:10:04
$MIK: Michaels: A Big 2015 Is Ahead (MIK): http://t.co/yf1xKiViri
Long & Short Ideas
25 Mar 15 03:01:03
Michaels: A Big 2015 Is Ahead http://t.co/0FJhlfpAAL $MIK
Seeking Alpha
25 Mar 15 03:01:02
Michaels: A Big 2015 Is Ahead http://t.co/8XQ2ryvRYC $MIK
US Banking News
25 Mar 15 01:20:54
Weekly Investment Analysts’ Ratings Updates for Michaels Companies $MIK http://t.co/D7K1PKMFXl
Sleek Money
25 Mar 15 01:20:07
Weekly Investment Analysts’ Ratings Updates for Michaels Companies $MIK http://t.co/QYN1wJ6IU5
Breaking News
25 Mar 15 01:10:04
$MIK: Weekly Investment Analysts' Ratings Updates for Michaels ...: http://t.co/AkA5JplE8Z
Stephens Inc
23 Mar 15 07:01:40
Morning Brief: Stephens releases research reports on $QRVO $SFM $MIK $TIF $VCYT $INT $ZAYO http://t.co/fFSBoKPnNX #SIResearch
Breaking News Now
23 Mar 15 04:25:06
$MIK: Michaels Companies Inc (MIK) Issues Q1 Earnings Guidance: http://t.co/PnoTiN8WUh
StockNewsWires
23 Mar 15 04:25:05
$MIK: Michaels Companies Inc (MIK) Issues FY16 Earnings Guidance: http://t.co/8VPJrwKX8P
Sleek Money
22 Mar 15 05:50:06
Deutsche Bank Reiterates $32.00 Price Target for Michaels Companies $MIK http://t.co/C0OmibH36I
BreakingStocksNews
22 Mar 15 05:50:03
$MIK: Deutsche Bank Reiterates $32.00 Price Target for Michaels ...: http://t.co/SQ7dttEalH
StockNewsWires
22 Mar 15 05:45:06
$MIK: Telsey Advisory Group Raises Michaels Companies Price Target to ...: http://t.co/r3F86UFTse
The Legacy News
22 Mar 15 05:41:11
Nomura Raises Michaels Companies Price Target to $33.00 $MIK http://t.co/KhaIF98jZO
ProVesting
22 Mar 15 05:39:03
$MIK: Nomura Raises Michaels Companies Price Target to $33.00 (MIK): http://t.co/Ewt8CFsHbi
The Legacy News
22 Mar 15 04:56:10
Telsey Advisory Group Raises Michaels Companies Price Target to $30.00 $MIK http://t.co/9CNPWwrXfl
ProVesting
22 Mar 15 04:37:02
$MIK: Credit Suisse Group AG Reiterates "$27.00" Price Target for ...: http://t.co/o0UcXWMZSK
Sleek Money
22 Mar 15 04:34:15
Credit Suisse Group AG Reiterates “$27.00″ Price Target for Michaels Companies $MIK http://t.co/RSVoS1AInB
Sleek Money
21 Mar 15 06:50:12
Michaels Companies PT Raised to $33.00 $MIK http://t.co/aHl3VHoRSM
StockNewsWires
21 Mar 15 06:46:02
$MIK: Michaels Companies PT Raised to $33.00 (MIK): http://t.co/IKCmGv6bFw
Breaking News
21 Mar 15 06:22:04
$MIK: Michaels Companies Given a $32.00 Price Target by Deutsche ...: http://t.co/TSPYNswpJJ
Breaking News Now
21 Mar 15 06:22:04
$MIK: Telsey Advisory Group Increases Michaels Companies Price Target ...: http://t.co/6xQl1POD1g
ProVesting
21 Mar 15 04:40:03
$MIK: Michaels Companies PT Set at $27.00 by Credit Suisse Group AG ...: http://t.co/KvJ5ithhq4
WKRB News
21 Mar 15 04:34:18
Michaels Companies PT Set at $27.00 by Credit Suisse Group AG $MIK http://t.co/4RAJvCp0KZ
Breaking News Now
20 Mar 15 22:30:02
$MIK: Michaels Companies PT Set at $27.00 by Credit Suisse Group AG ...: http://t.co/09yRmHKO0O
Quantumboy
20 Mar 15 17:38:26
RT @RatingsNetwork: Michaels Companies given $27.00 PT by Credit Suisse Group AG. hold rating. http://t.co/fokKj8Eje5 $MIK #MIK
US Banking News
20 Mar 15 16:51:22
Credit Suisse Group AG Reiterates $27.00 Price Target for Michaels Companies $MIK http://t.co/P0aJf9e9or
Breaking News Now
20 Mar 15 16:40:03
$MIK: Michaels Companies Given a $27.00 Price Target by Credit Suisse ...: http://t.co/8dPcm32z24
				
				
By  +Follow June 26, 2014 3:34AM
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