Party Supply Stores : Texas Chain to Acquire Moskatel’s for $15 Million

Moskatel’s, a chain of 30 party supply and arts and crafts stores, has agreed to be acquired by a fast-growing Texas chain for $15 million in cash.

In buying Moskatel’s, Michaels Stores of Irving, Tex., makes its initial foray into California and continues on its aggressive growth campaign that has seen it double in size within two years.

Michaels operates 56 stores selling inexpensive picture frames, silk flowers, arts and craft supplies and other home decorations in 12 states.

Moskatel’s chairman and owner, Ray Shimizu, 43, will step down once the sale is completed. “This is a good marriage,” Shimizu said. “They made a good business offer and they have more resources in order for the company to grow.” Shimizu and his partners bought Moskatel’s nine years ago for $3.3 million.

Moskatel’s, founded in 1946 by Leon Moskatel, specialized in party and wedding supplies. There were eight stores when Shimizu acquired the chain. It has since grown to the current 30. Seventeen stores are in the Los Angeles area and the rest are spread throughout the state. The company, based in Buena Park, had sales of $33 million last year. “You can find everything (in a Moskatel’s store) for a wedding except the bride and groom and the cake,” Shimizu said.

A healthy housing market and widespread interest in arts and crafts attracted Michaels to California, said Joel H. Mathis, vice president-administration for Michaels. “There are a lot people that use arts and crafts for home decor,” he said.

Mathis said that except for adding picture framing departments to Moskatel’s stores, “We will not do anything dramatic in the immediate future.”

By adding a picture framing department, Moskatel’s will end up competing more directly with Aaron Brothers Art Marts, said Teneyck T. Wellford, an analyst at the brokerage firm of Branch, Cabell & Co. “It would be interesting to see what happens there,” he said.

On the American Stock Exchange, Michaels shares closed at $7.875, up 25 cents.