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Yankee Candle Agrees to Buyout

Madison Dearborn Partners will take the company private for $1.4 billion.
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Yankee Candle


became the latest company to agree to a private equity buyout, announcing Wednesday a deal to be acquired by Madison Dearborn Partners for about $1.4 billion in cash.

The scented-candle purveyor's shareholders will receive $34.75 a share, representing a 57% premium to the stock's closing price on July 25, the last day before the company's announcement that it planned to explore strategic alternatives.

Including the assumption of debt, the deal is valued at $1.7 billion. The companies expect the transaction to close in the first quarter.

Separately, Yankee Candle reported better-than-expected third-quarter earnings and raised its full-year earnings forecast.

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The South Deerfield, Mass.-based company earned $14.9 million in the third quarter, down from $15.4 million a year earlier. Earnings per share rose to 37 cents from 35 cents due to fewer shares outstanding in the most recent period. Analysts polled by Thomson First Call expected earnings of 27 cents a share.

Sales climbed to $159.6 million from $136.5 million a year earlier, exceeding Wall Street's estimate of $149.5 million.

"Our retail division continues to deliver positive same store sales growth and had a strong segment profit performance in the third quarter," the company said. "In addition, wholesale sales recovered from a softer than expected second quarter and delivered excellent revenue growth and strong overall results versus plan."

Yankee Candle now expects 2006 earnings of $2.01 to $2.05 a share, including a 5-cent tax benefit.

Excluding the tax gain, the company sees earnings of $1.96 to $2 a share, ahead of its previous projection of $1.88 to $1.98. Analysts expect earnings of $1.84 a share.

Yankee Candle predicts sales growth of 10% to 12% for the year.

Shares of the company were vaulting 17% in premarket trading to $33.65.