Private equity shop Leonard Green & Partners will pay $1.6 billion to acquire fabric retail chain Jo-Ann Stores. The deal, at $61 per share, represents a 34% premium over the company’s closing price yesterday. J.P. Morgan, Bank of America Merrill Lynch and TCW/Crescent Mezzanine will provide financing for the deal. Jo-Ann Stores sells fabrics and craft supplies in 756 stores across 48 states. Los Angeles-based Leonard Green & Partners has more than $9 billion under management.
Jo-Ann Stores, Inc. (NYSE: JAS) today announced that it has entered into a definitive agreement to be acquired by an affiliate of Leonard Green & Partners, L.P., for a total price of approximately $1.6 billion, or $61.00 per share in cash. The offer price represents a 34% premium to the closing price of Jo-Ann’s shares on December 22, 2010.
The board of directors of Jo-Ann Stores, on the recommendation of a special committee comprised entirely of independent directors (the Special Committee), approved the merger agreement by a unanimous vote of the non-employee directors and recommends that the company’s shareholders adopt the agreement.
Darrell Webb, chairman and chief executive officer of Jo-Ann Stores, commented, “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.”
Jo-Ann Stores’ lead director and chairman of the Special Committee, Scott Cowen, stated, “After a thorough assessment, the Special Committee and the board of directors concluded that the proposal put forth by Leonard Green & Partners is the best way to maximize value for shareholders, who will receive a substantial and immediate cash premium for their shares. While the company was not actively seeking this transaction, once the offer was received and negotiated, the Special Committee determined that it was in the best interest of the company’s shareholders, as well as its employees and other partners. Leonard Green & Partners has significant expertise in the retail space and is dedicated to cultivating and supporting the growth of Jo-Ann’s business.”
Todd Purdy of Leonard Green & Partners said, “Jo-Ann Stores is a clear leader in the fabric and craft retail industry. We are excited to partner with Jo-Ann Stores’ talented management team and look forward to the next phase of the company’s growth.”
If the acquisition is approved by the holders of a majority of Jo-Ann Stores’ shares of common stock, the transaction is expected to close in the first half of calendar 2011. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals, but is not subject to any condition with regard to the financing of the transaction. In accordance with the merger agreement, the board of directors will also be permitted to solicit alternative proposals through February 14, 2011, to ensure the transaction is the best available for its shareholders.
J.P. Morgan, Bank of America Merrill Lynch and TCW/Crescent Mezzanine have provided committed financing for the transaction.
Jo-Ann Stores will file a preliminary proxy statement with the SEC which will contain detailed information about the transaction and the board and special committee process. Once the SEC completes its review of the preliminary proxy statement, Jo-Ann Stores will file the definitive proxy statement with the SEC and distribute it to shareholders.
Centerview Partners and J.P. Morgan are serving as financial advisors and Sullivan & Cromwell LLP and Thompson Hine LLP as legal advisors to the Jo-Ann Stores board of directors. Bank of America Merrill Lynch and Barclays Capital are serving as financial advisors and Latham & Watkins LLP and Squire, Sanders & Dempsey L.L.P. are serving as legal advisors to Leonard Green & Partners.
About Jo-Ann Stores, Inc.
Jo-Ann Stores, Inc. (www.joann.com) is the nation’s largest specialty retailer of fabrics and one of the largest specialty retailers of crafts operating 756 stores in 48 states.
About Leonard Green & Partners, L.P.
Leonard Green & Partners is a leading private equity firm with over $9 billion in equity capital under management. Based in Los Angeles, Leonard Green & Partners invests in market leading companies across a range of industries. Significant current retail investments include Whole Foods Market, PETCO Animal Supplies, Leslie’s Poolmart, Sports Authority, The Container Store, Tourneau, David’s Bridal, Neiman Marcus Group, Jetro Cash & Carry and Tire Rack.