Financial sponsor Apollo Global Management is acquiring Irving, Texas-based The Michaels Cos. Inc. for a total consideration of about $5.5 billion (including equity and debt). The transaction will increase the amount of funded debt on Michaels' balance sheet by $1.6 billion. We revised our outlook on Michaels to stable from positive and affirmed our 'B' issuer credit rating. At the same time, we assigned our 'B' issue-level rating and '3' recovery rating to the company's proposed senior secured facilities and our 'CCC+' issue-level rating and '6' recovery rating to its proposed senior unsecured notes. The stable outlook reflects our expectation that Michaels will sustain S&P Global Ratings-adjusted leverage in the 5x area and generate normalized annual free operating cash flow
