Guitar Center, the leading US retailer of musical instruments and amplification and recording equipment based in Westlake Village, California, has agreed to be acquired by private equity f
Guitar Center, the leading US retailer of musical instruments and amplification and recording equipment based in Westlake Village, California, has agreed to be acquired by private equity firm Bain Capital Partners for a total transaction value of USD2.1bn, including assumed debt.
Under the agreement, shareholders will receive USD63 in cash in exchange for each share of Guitar Center common stock, representing a 26 per cent premium over the shares’ closing price on June 26. The transaction is expected to close in the fourth quarter and is subject to the approval of the company’s stockholders.
The agreement represents the culmination of an auction process, led by Goldman Sachs, to solicit interest in a potential acquisition of Guitar Center. Its board of directors, on the recommendation of a special committee of independent directors, has approved the agreement and recommended that shareholders back the transaction.
‘We believe this transaction delivers outstanding value for our stockholders, and is a strong validation of the company’s accomplishments over the years as well as our future growth prospects,’ says Guitar Center chairman and chief executive Marty Albertson.
‘Bain Capital has a successful track record and significant investment experience in the retail industry. We are committed to maintaining our vendor relationships and ensuring our customers will continue to experience the same quality and selection of musical instrument products as well as the high level of service and professional advice through our stores and web sites.’
Jordan Hitch, a managing director at Bain Capital, says: ‘As the leading retailer of musical instruments in the US, Guitar Center enjoys great brand recognition among musicians nationwide, a loyal customer base, and a track record of significant growth.’
Goldman Sachs and Peter J. Solomon acted as financial advisors to the special committee and provided fairness opinions regarding the proposed sale. Latham & Watkins was counsel to the company and Bingham McCutchen to the special committee. For Bain Capital, JPMorgan and Lehman Brothers acted as financial advisors, and Kirkland & Ellis as legal counsel.
Guitar Center is the leading US retailer of guitars, amplifiers, percussion instruments, keyboards and pro-audio and recording equipment through more than 210 Guitar Center stores across the US, while the firm’s Music & Arts division operates more than 95 stores specialising in band instruments for sale and rental, serving teachers, band directors, college professors and students. The company is also the largest US direct response retailer of musical instruments through wholly owned subsidiary Musician’s Friend, its catalogues and web sites.
Bain Capital manages various pools of capital including private equity, high-yield assets, mezzanine capital and public equity with around USD50bn in assets under management. Since its establishment in 1984, Bain has made private equity investments and add-on acquisitions in over 240 companies around the world, including retail and consumer firms such as Toys ‘R’ Us, Michaels Stores, Burger King, Warner Music Group, Dunkin’ Brands, Shopper’s Drug Mart, Dollarama and Staples. The firm is based in Boston with offices in New York, London, Munich, Hong Kong, Shanghai, and Tokyo.
