Baker Ahles & Kaskovich

June 18, 2014

Debt-heavy Michaels Stores plans long-awaited IPO soon

Also, RadioShack’s CEO pays a visit to the White House Maker Faire and a Fort Worth startup targets social media business in India.

After trying for two years, Michaels Stores, the Irving-based arts and crafts chain that was taken private by Bain Capital Partners and Blackstone Group in 2006, is preparing to go public again, as early as next week.

According to a filing with the Securities and Exchange Commission this week, the retailer, which is changing its name to the Michaels Cos., plans to offer 27.8 million shares at $17 to $19 each and hopes to raise as much as $528 million.

Michaels was acquired by Bain and Blackstone for about $6 billion, and each firm will own 40 percent of the company after the offering, according to the filing. At the high end of the price range, Michaels would have a market value of about $3.9 billion, based on 203.1 million shares outstanding. Including debt, Michaels would have an enterprise value of $7.1 billion, data compiled by Bloomberg show.

Michaels has 1,263 stores under the Michaels and Aaron Brothers brands, and generated about $4.6 billion in sales in the year through Feb. 1. Net sales increased 3.7 percent in the most recent fiscal year, driven by comparable-store sales growth and the opening of 56 outlets, according to the filing. Michaels posted $243 million in net income last year, up 22 percent from the previous year.

Michaels will trade on the Nasdaq exchange under the symbol MIK. The company plans to use the proceeds from the offering to pay down a little of its debt. The company, which was virtually debt-free before its leveraged buyout, had about $3.7 billion in long-term debt as of Feb. 1, according to the filing.

— Bloomberg News, Steve Kaskovich

Fort Worth startup targets India for social media

India has something like 100 million Facebook users. Is that everybody?

TCU grad Luke Walton doesn’t think so, and he started a venture last month to provide a networking website for students enrolled in a number of India’s larger universities. It’s sort of a flashback to Facebook’s origins when it was just for students at select universities, and that’s why he figures there’s a market for another social network.

Walton’s venture is called He raised about $200,000 in April, launched the site May 5 and has about 10,000 users, he says. Bevy has four employees at its Fort Worth offices and four in Bangalore, India.

“India never experienced what Facebook was before it expanded” its users to the general population, said Susan Nix of 817 Group, which developed Bevy and then spun if off in April. With students in rural and semirural areas participating in growing online classes, she said, Bevy offers a closed network for each school that allows students and alumni to keep in touch.

Walton said “we think there’s enough value to people” who can create their own subgroups within each school’s site to make Bevy a success. He sees a life cycle of a freshman joining, building networks and eventually finding a job and keeping in touch with fellow alumni.

He hopes to have 1 million users a year from now and is about to begin pitching new investors with the goal of raising $1 million in new capital.

RadioShack CEO joins makers at White House

RadioShack CEO Joseph Magnacca visited the White House on Wednesday as part of the Maker Faire, a gathering of investors and entrepreneurs organized by the administration to promote technology innovation.

More than 100 “makers” from 25 states were at the White House as President Barack Obama focused on helping fledgling businesses create and market their products, The Associated Press reported.

RadioShack is tapping into the “maker movement” as it tries to stem a slide in sales and rebuild its brand. It’s a natural for the Fort Worth-based consumer electronic chain, which grew up as a source of electronics parts for the do-it-yourself crowd a generation ago. — Steve Kaskovich

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