Yankee Candle Co. Sold

Scented candles manufacturer/marketer Yankee Candle Co., announced today it was sold for $1.4 billion to an affiliate of Chicago-based private equity firm Madison Dearborn Partners. The deal, which includes approximately $300 million in debt, is expected to close in the first quarter of 2007.

Founded in 1969 by Michael Kittredge, Yankee Candle was purchased by New York-based private equity firm Forstmann Little & Co. in 1998, and went public in 1999. The South Deerfield, MA-based candle maker, which in July acquired Petaluma, CA-based competitor Illuminations, had at the same time hired Lehman Bros. to help it explore strategic alternatives, including a potential sale of the company, to increase the value for shareholders.

Bruce Besanko, Yankee Candle’s chief financial officer, told MULTICHANNEL MERCHANT that “there were multiple interested parties along the entire process. Based on the board’s opinion and its advisers’ evaluation, they believed this to be the best value for shareholders. Management believes this is a very good outcome.”

Besanko said he doesn’t foresee any changes in the way the company conducts business due to the transaction. “There is no expectation of any change whatsoever,” he said. “We fully expect this to be business as usual. We see no reason to make substantive changes at all.”

Yankee Candle also released its third-quarter financial figures. Net income for the period ended Sept. 30 fell 3%, to $14.9 million from $15.4 million a year ago. But earnings per share rose from 35 cents to 37 cents on fewer outstanding shares, and were above analysts’ average estimate of 27 cents per share. Quarterly sales rose nearly 17%, to $159.6 million from $136.5 million a year ago. The company’s 2005 sales were up 8.5%, to $601.2 million.

Following news of the sale, Yankee Candle’s shares increased 17% to a yearly high. Madison Dearborn’s purchase price of $34.75 a share represents a 21% premium to Yankee Candle’s closing price on Tuesday, and a 57% premium to the closing price on July 25, the day the company put itself on the for-sale block. Company shares rose to $4.91 on Wednesday to $33.63 on the New York Stock Exchange.

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