In today’s issue of Creative Leisure News, Mike Hartnett reports on the proposed sale of Jo-Ann Stores to Leonard Green & Partners for $1.6 billion announced on December 23, 2010. You can read the official press release at http://finance.yahoo.com/news/JoAnn-Stores-to-Be-Acquired-bw-2433042068.html?x=0&.v=1. See the complete article below, or go to http://www.clnonline.com for more.
JO-ANN TO BE SOLD
Jo-Ann entered into a definitive agreement to be acquired by an affiliate of Leonard Green & Partners for a approximately $1.6 billion, or $61.00/share in cash. The deal has to be approved by shareholders, but the offer price represents a 34% premium on the closing price of Jo-Ann’s shares on Dec.22. The board can solicit better offers through Feb. 14. If none are forthcoming and the shareholders approve, the deal should be completed by the end of June.
Shares jumped 33.6% after the prospective deal was announced.
Jo-Ann Chair/CEO Darrell Webb said, “We are excited about the prospect of working with Leonard Green & Partners as we further capitalize on opportunities to accelerate the expansion and upgrade of our stores and pursue market share gains. With the help of our talented and dedicated team, we will continue to offer our customers a superior shopping experience for all of their fabric and craft needs.”
Leonard Green has committed to provide $449.3 million in equity. The remainder of the purchase price would come from debt financing and cash-on-hand, according to Forbes. The $9 billion private equity firm owns other retail operations such as Container Store, David’s Bridal, Neiman Marcus, Petco, Rite Aid, Sports Authority, and Whole Foods Markets. Los Angeles-based Leonard Green has invested in 52 companies with a value of $44 billion since its founding in 1989, according to the firm’s website.
“Remodeling and opening new stores are helping drive revenue at a more profitable rate,” Brad Thomas, an analyst at Keybanc Capital Markets told the San Francisco Chronicle. Jo-Ann “has a lot of components attractive to private equity,” including no debt, he said.
The price is about 7.8 times Jo-Ann Stores’ earnings before interest, taxes, depreciation and amortization over the past year, about the same as the median takeover of a U.S. retailer in the past 12 months, Bloomberg News reported.
If the transaction goes forward, ”We do not anticipate any major changes to the business, management, employees or facility locations,'” said Lisa Greb, Jo-Ann’s Director of Corporate Communications. “‘We do have a strong and growing business and Leonard Green plans to continue our successful growth.”