Michaels Stores Buyout

Michaels Stores, Inc. (MIK)
$6B Buyout - Completed

Summary

$6 billion buyout by Bain And Blackstone

Takes arts and crafts retailer private at $44 per share

Announced 6.30.06

Closed 10.31.06

Deal announced despite stock option backdating issues

MIK is target of investigations and lawsuits
Merger agreement appears to be silent on backdating
Suggesting that seller is taking risk of resolution
See Stock Option Backdating - Company Scorecard

Developments

$1.075B note offering

Announced 10.11.06

Advisors

MIK: JP Morgan / Cravath
Special committee: Goldman / Wachtell
Buyout firms: Deutsche Bank / Bank of America /
Credit Suisse / Ropes & Gray

Merger Agreement

General

EDGAR Filing
Hyperlinked Version
Detailed hyperlinked index follows

Article I The Merger

1.1 The Merger
1.2 Closing
1.3 Effective Time
1.4 Effects of the Merger
1.5 Certificate of Incorporation and Bylaws
1.6 Directors
1.7 Officers

Article II Effect of the Merger on the Capital Stock of the

Constituent Corporations; Exchange Fund;

Company Equity Awards

2.1 Effect on Capital Stock
2.2 Exchange Fund
2.3 Company Equity Awards

Article III Company Reps

3.1(a) Organization, Standing and Corporate Power
3.1(b) Subsidiaries
3.1(c) Capital Structure
3.1(d) Authority; Noncontravention
3.1(e) SEC Documents
3.1(f) Information Supplied
3.1(g) Absence of Certain Changes or Events
3.1(h) Litigation
3.1(i) Contracts
3.1(j) Compliance with Laws; Environmental Matters
3.1(k) Labor and Employment Matters
3.1(l) Employee Benefit Matters
3.1(m) Taxes
3.1(n) Title to Properties
3.1(o) Intellectual Property
3.1(p) Insurance
3.1(q) Voting Requirements
3.1(r) State Takeover Statutes
3.1(s) Brokers and Other Advisors
3.1(t) Opinions of Financial Advisors
3.1(u) Affiliate Transactions
3.1(v) No Other Representations or Warranties

Article III Sponser Entities Reps

3.2(a) Organization, Standing and Corporate Power
3.2(b) Authority; Noncontravention
3.2(c) Information Supplied
3.2(d) Available Funds
3.2(e) Operations and Assets of the Sponsor Entities
3.2(f) Ownership of Company Common Stock
3.2(g) Brokers and Other Advisors
3.2(h) No Other Representations or Warranties

Article IV Covenants Relating to Conduct of Business

4.1 Conduct of Business
4.2 No Solicitation

Article V Additional Agreements

5.1 Preparation of the Proxy Statement; Stockholders
Meeting
5.2 Access to Information; Confidentiality
5.3 Reasonable Best Efforts
5.4 Benefit Plans
5.5 Indemnification, Exculpation and Insurance
5.6 Fees and Expenses
5.7 Public Announcements
5.8 Stockholder Litigation
5.9 Financing

Article VI Conditions Precedent

6.1 Each Party
6.2 Sponsor Entities
6.3 Company
6.4 Frustration of Closing Conditions

Article VII Termination, Amendment and Waiver

7.1 Termination
7.2 Effect of Termination
7.3 Amendment
7.4 Extension; Waiver
7.5 Procedure for Termination or Amendment

Article VIII General Provisions

8.1 Nonsurvival of Representations and Warranties
8.2 Notices
8.3 Definitions
8.4 Interpretation
8.5 Consents and Approvals
8.6 Counterparts
8.7 Entire Agreement; No Third-Party Beneficiaries
8.8 Governing Law
8.9 Assignment
8.10 Specific Enforcement; Consent to Jurisdiction
8.11 Severability

Proxy Solicitation

Shareholder meeting

Scheduled for 10.05.06

Proxy statement

Definitive proxy statement 9.06.06

Table of contents

Preliminary proxy statement 9.01.06

Table of contents

Preliminary proxy statement 8.01.06

Table of contents

Financing

Financing summary

Equity
Debt

Buyer financing covenant

Proxy statement disclosure
Merger agreement §5.09

Deal Protection

No shop covenant

Merger agreement §4.02
Proxy statement disclosure

Break-up fee

$120 mm
Agreement §8.2
Proxy statement disclosure

Fairness Opinion

JP Morgan fairness opinion

Proxy statement disclosure

Goldman Sachs fairness opinion

Proxy statement disclosure

Regulatory Approvals

HSR Act

Merger agreement §5.03
Proxy statement disclosure

Tax Matters

Disclosure

Proxy statement disclosure

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