Who Bought Out Hobby Lobby? A Detailed Look at the Retailer‘s 2017 Private Equity Acquisition - 33rd Square (2024)

Hey there! Lillie here, your favorite home improvement guru. Today I wanted to provide you with some insightful background on Hobby Lobby, which many of us rely on for quality craft supplies and home decor items. Grab your tape measure, because we’re going to dive into the details behind Hobby Lobby’s 2017 acquisition deal!

Back in 2017, Hobby Lobby surprised the retail world when it announced it had agreed to sell a controlling stake to two investment firms, Ares Management and the Ontario Teachers’ Pension Plan (OTPP). This marked the first time in its 45-year history that the company was not 100% family owned.

As a fellow home improvement enthusiast, I was fascinated by this deal and what it meant for one of my go-to craft stores. Let’s explore the history of this retail chain and how the 2017 equity acquisition went down.

The Rise of Hobby Lobby

Hobby Lobby was founded way back in 1972 by David and Barbara Green. The couple started off small, opening a 300-square-foot storefront in Oklahoma City. But over the next four decades, they grew Hobby Lobby into a retail behemoth operating over 900 stores across 47 states.

By 2017, Hobby Lobby had an estimated annual revenue of $4.4 billion and employed over 43,000 people. From its humble beginnings, David and Barbara Green built Hobby Lobby into one of the largest privately owned arts-and-crafts chains in America.

Just like how over the years I’ve gradually upgraded my own home improvement skills from amateur DIYer to professional renovator, the Greens systematically grew Hobby Lobby by opening new store locations and acquiring related companies. For example, in 1997 they purchased Hemispheres, a chain of frame stores, which was rebranded as Hobby Lobby Creative Centers.

However, up until 2017, Hobby Lobby remained completely family owned. David and Barbara Green were still at the helm, guiding the company they had built from the ground up. But that changed when they agreed to sell a controlling stake to outside investors Ares and OTPP.

The $8 Billion Private Equity Deal

In early 2017, Hobby Lobby announced its landmark deal: Ares and OTPP would acquire a majority share of the company through a private equity transaction valuing the retailer at a whopping $8 billion.

This deal was similar to when we decided to renovate our bathroom – we had to bring in specialized contractors to do high-quality tile work rather than trying to tackle it ourselves as amateurs. The Greens knew they needed external expertise to take Hobby Lobby to the next level, so they partnered up with leading investment firms.

According to the terms, the Green family maintained a minority stake of around 20-25% ownership in Hobby Lobby but gave up majority control to Ares and OTPP, who acquired around 75-80% ownership.

This was the first time Hobby Lobby‘s total value was quantified. Analysts took the $8 billion price tag to mean the company likely had annual revenues around $4.4 billion at the time of the deal.

For the Green family, it allowed them to realize significant value by selling a controlling stake while still keeping a minority portion of the business they built. Mark Cohen, a professor at Columbia Business School, interpreted the deal:

“The family was able to monetize the greater part of their holdings while at the same time maintaining absolute control over the governance and strategy of the business.”

Who Are Ares Management and OTPP?

Now you may be wondering – who exactly are the investing giants that acquired Hobby Lobby?

Ares Management is a leading global alternative asset manager based in Los Angeles. Since its founding in 1997, Ares has invested over $90 billion in companies across industries. As of March 2022, it had approximately $334 billion in assets under management.

The Ontario Teachers’ Pension Plan (OTPP) is one of Canada’s largest single-profession pension plans. With over $242 billion in assets, it provides retirement benefits to over 330,000 teachers. The OTPP is renowned for its substantial portfolio of investments across the globe.

Together, Ares and OTPP command deep wells of capital. And for them, acquiring a majority stake in Hobby Lobby represented a unique opportunity to gain partial ownership of an extremely profitable retail chain with tremendous growth potential and a loyal customer base.

It was a win-win situation. The Green family cashed out while still retaining some ownership, and Ares and OTPP acquired a thriving company positioned for continued expansion.

Insider Perspectives on the Deal

Retail analysts have shared mixed opinions on what this new ownership structure means for the arts-and-crafts giant.

Neil Stern, a senior partner at global consulting firm McMillanDoolittle, speculated that Ares and OTPP may look to broaden Hobby Lobby’s product mix and customer demographics:

“Private equity wants to drive growth…One could surmise that Hobby Lobby will begin testing new store formats, expanding departments, and implementing new technologies.”

But other experts argue that major changes are unlikely given that the Green family still runs operations.

As Howard Davidowitz, chairman of retail consulting firm Davidowitz & Associates Inc., bluntly stated:

“If I owned Hobby Lobby, would I tell the Greens how to run their business? No. The Greens are geniuses.”

Regardless of predictions, Hobby Lobby has stated that its devoted customers can expect “no changes” from the acquisition deal. For now, the Green family continues to run their empire. But bringing on board Ares and OTPP has opened up possibilities for Hobby Lobby‘s future, from accelerated growth to even a potential IPO.

As a dedicated craft enthusiast, I’ll be excited to see where one of my favorite go-to stores for home improvement projects heads next!

Gear Up for Your Own DIY Wins!

Now that you know all about Hobby Lobby’s private equity deal, it’s time to start brainstorming your own DIY home improvement projects!

Here are a few beginner-friendly ideas you can tackle after picking up supplies from your local Hobby Lobby:

• Upcycle an old dresser with chalk paint for a shabby-chic look
• Use stencils and spray paint to give kitchen canisters a fresh new design
• Decorate windows with colorful vinyl decals for a fun pop
• Display your favorite photos on a gallery wall using framed prints

The possibilities are endless. Visit Hobby Lobby with some project inspiration, and you’ll be on your way to enhancing your home’s style with your own two hands. Pro tip: Sign up for their newsletter to get notified about weekly sales and coupons!

What are you waiting for? Let’s get started on DIY-ing a space you‘ll love coming home to. Grab those paint swatches and let’s do this!

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