Yankee Candle In $1.7B Buyout

SOUTH DEERFIELD, MA-Scented candle maker Yankee Candle Co. will be sold for $1.7 billion to the private equity firm Madison Dearborn Partners LLC in a deal that sent the candle maker’s stock soaring 17% to its highest level this year. The acquisition, which still must be approved by Yankee Candle shareholders, is expected to close early next year, the company says.

Under the terms of the agreement, Madison Dearborn will pay about $1.4 billion in cash, or $34.75 per share, and take on $300,000 of the candle maker’s debt. The Chicago-based buyer, which has acquired 16 other retail companies, specializes in buying out firms in the health care, packaging, consumer, financial services and communications industries.

The sale was the second in three years for Yankee Candle since New York-based buyout company Forstmann Little & Co. sold its holdings in the South Deerfield, MA firm to Goldman Sachs Group. Forstmann, which posted an almost five-fold return on the deal, paid $500 million to acquire a 90% share in Yankee Candle in April 1998.

Yankee Candle, which operates 409 stores in the US and is sold wholesale in more than 19,000 locations in North America and Europe, put itself on the block in July, eight months after announcing that it was closing stores, raising prices and slashing jobs in a bid to offset rising wax and energy costs that were burning into the company’s profits. News of the sale came just a week after Yankee Candle’s landlords, Candoff LLC and Candist LLC, announced it had sold the firm’s South Deerfield headquarters and primary warehouse to a joint venture between AGC Equities LLC and Gumowitz Real Estate in an unrelated $33.6 million deal.

The sale was announced the same day Yankee Candle posted an $86.6 million or 13.8% increase in gross profit for the third quarter. Sales for the period increased 17% to $159.6 million, the company said.

The candle company, which was started in 1969 by founder Mike Kittredge in his mother’s kitchen, recently paid $22 million to acquire “Illuminations,” another candle maker with 15 stores.