Jo-Ann Stores Crafts $1.6B Buyout From Leonard Green

Jo-Ann Stores (NYSE:JAS) shareholders received an early Christmas present on Thursday as the fabric and craft store operator reached a deal to be taken private by Leonard Green for $1.6 billion.

The leveraged buyout for $61 a share in cash places a 34% premium on the Wednesday closing price of the parent of Jo-Ann Fabric and Craft stores.

The agreement allows Jo-Ann to still seek alternative deals through February 14.

“We are excited about the prospect of working with Leonard Green & Partners as we further capitalize on opportunities to accelerate the expansion and upgrade of our stores and pursue market share gains,” Jo-Ann CEO Darrell Webb said in a statement.

Jo-Ann said it sees the deal closing in the first half of 2011.

Los Angeles-based Leonard Green has experience with established retailers, including luxury retailer Neiman Marcus, The Sports Authority, PETCO and RiteAid (NYSE:RAD).

“Jo-Ann Stores is a clear leader in the fabric and craft retail industry. We are excited to partner with Jo-Ann Stores’ talented management team and look forward to the next phase of the company’s growth,” Todd Purdy of Leonard Green said in the statement.

Shares of Jo-Ann surged 33.03% to $60.65 ahead of Thursday’s close in the wake of the deal.

JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC) and TCW/Crescent Mezzanine provided financing for the deal.