Guitar Center To Be bought out

[mightymike]

http://www.bloomberg.com/apps/news?pid= ... refer=home


Guitar Center to Be Bought by Bain for $1.9 Billion (Update4)

By Heather Burke

June 27 (Bloomberg) -- Guitar Center Inc., the largest U.S. retailer of musical instruments, agreed to be bought by Bain Capital Partners LLC for $1.9 billion.

Bain will pay $63 a share in cash, Guitar Center said today in a statement, 26 percent more than the stock's closing price yesterday. The buyout firm will also assume Guitar Center's debt, bringing the total transaction value to $2.1 billion.

Guitar Center sells Fender guitars, Pearl drums and Yamaha keyboards at more than 210 U.S. stores and online. Bain was part of a group that agreed last week to buy Home Depot Inc.'s contractor-supply unit for $10.3 billion, and has also invested in retailers Toys ``R'' Us Inc. and Michaels Stores Inc.

``They are the market leader in the musical instruments business,'' said Joan Storms, an analyst at Wedbush Morgan Securities in Los Angeles who rates the shares ``hold.'' ``They put mom-and-pops out of business when they come into town.''

Guitar Center reported revenue gains of at least 12 percent every quarter since 1998. Sales climbed 14 percent to $2.03 billion last year, a sixfold increase since the company went public in 1997.

The shares jumped $9.85, or 20 percent, to $59.91 at 12:57 p.m. New York time in Nasdaq Stock Market composite trading. The stock has almost quadrupled since its initial share sale at $15.

Guitar Center began in 1959 when former car salesman Wayne Mitchell purchased a small appliance and organ store in Hollywood, California. In 1964, Mitchell converted a movie theater next door and opened the first Guitar Center on Sunset Boulevard.

RockWalk

The company operates the Hollywood RockWalk in front of its store on Sunset. The monument features cemented handprints and plaques honoring influential rock musicians such as John Lennon and instrument makers including Les Paul.

Competitors include Sam Ash Music Corp., which operates 45 U.S. stores.

Guitar Center is bigger than its competitors, making it unlikely a rival could have bought them, said Thierry Wuilloud, who helps manage $2.7 billion at Becker Capital Management in Portland, Oregon. The firm held 306,516 Guitar Center shares, a 1 percent stake, as of March. ``It's a reasonable transaction.''

Guitar Center bought musical-instrument retailer Woodwind & The Brasswind for about $30 million in February. In 2005 it paid $90 million for closely held Music & Arts Center, which sells and rents oboes, trumpets and other school-band instruments to students and teachers.

Buyouts This Year

Private-equity firms have announced more than $543 billion in buyouts this year, including proposed takeovers of retailers Alliance Boots Plc and Dollar General Corp.

Guitar Center's board approved the purchase and recommended stockholders back the deal. Bain and Guitar Center expect the purchase to close in the fourth quarter.

Bain, based in Boston, manages about $50 billion in assets and has invested or acquired more than 240 companies since its founding in 1984. Bain participated this year in the $3.2 billion buyout of OSI Restaurant Partners Inc., owner of the Outback Steakhouse chain.

The firm also was part of buyout groups that acquired Toys ``R'' Us, the second-largest U.S. toy retailer, for $6.6 billion in 2005 and Michaels Stores, the biggest U.S. arts and crafts retailer, last year for $5.52 billion.

Goldman, Sachs & Co. and Peter J. Solomon Co. advised the Guitar Center board. Latham & Watkins LLP served as legal counsel to Guitar Center and Bingham McCutchen LLP advised its board. JPMorgan Chase & Co. and Lehman Brothers Holdings Inc. served as Bain's advisers. Kirkland & Ellis LLP was legal counsel.

To contact the reporters on this story: Heather Burke in New York at hburke2@bloomberg.net

Last Updated: June 27, 2007 13:01 EDT

[worldoftone]

It's big business.

- WOT

[toner]

..."They put mom-and-pops out of business when they come into town.''...

Well, that's a good thing, isn't it? Can you say "Wal-Mart"?

F**k GC! The employees at my local GC are all under 25 years old and they have given themselves cute little nicknames. They page each other like "Dazed and Confused, call on line 1" and "Rock-Man, meet a customer at the front desk".

Give me a f**king break! How sad is that?

BTW, I'd gladly allow Bain Capital Partners to pay my mortgage off since they apparently have more money than they know what to do with.

[NY Chief]

``They are the market leader in the musical instruments business,'' ....``They put mom-and-pops out of business when they come into town.''

There's an epitah I want on my tombstone. That's something to be real proud off.

[/quote]The firm also was part of buyout groups that acquired Toys ``R'' Us, the second-largest U.S. toy retailer, for $6.6 billion in 2005 and Michaels Stores, the biggest U.S. arts and crafts retailer, last year for $5.52 billion.
[/quote]

Remember the movie "The Blob"? Just keep absorbing it all.....

[toner]

The rich get richer... the rest of us get... OK I'll stop now.

[fillmore nyc]

Ok, but here's the good side of GC--Nobody in there has a f**king clue as to what they're doing. (Yes, this CAN be a good thing) Case in point: I went into the local GC at Christmas time for their Christmas giant, hooplah, give the shit away sale, and sitting there is a Rivera Chris Duarte combo, that the salesman (the 21 year old "dazed and confused" dipshit) says they're blowing out at $350 cause it doesnt work. I figured I might be able to turn it into a lab rat, and fix it myself when I had some extra time. Turns out it didnt work, cause it had the wrong footswitch plugged into it. Nobody bothered to unplug the footswitch to find out that it worked perfectly operating it off the front panel. I bought the amp, called Rivera and had the correct footswitch sent to me ($100), so my total investment into this $1700 amp was now $450. The kicker to this whole story? I took it to a GC in New Jersey and sold it to them for $1000. Sometimes ignorance has its perks.

[Eargasm]

Edited

[toner]

...What's the old saying? "Fool me once, shame on you, fool me twice, shame on me!"

Hilarious!!

Unless you're George dubyah, then it's "fool me once, uhhhh... ummm, what was I talking about? Oh look, something shiny!"

[fillmore nyc]

Hey, eargasm!! That old expression "fool me once, shame on you, fool me twice, shame on me" has to be modified to fit GC. Maybe it should read "fooled you once, made some bucks, fooled you twice, you stupid f**ks".

[Eargasm]

Edited

[Guitar Adjuster]

This is a good thing. When a public traded company is bought out by a group of investors they no longer have "stock" holders breathing down their back about return on investment, no more sarbains/oxley to contend with--which by the way cost a company like GC millions a year to comply with. Hopefully this will free up more capital so they can lower prices......right--NOT. The only people to benefit are most likely management. I bet anything they start closing down smaller less profitable stores within 6 months. Which will hopefully bring back some of the mom and pop music stores.

[NY Chief]

I'm not so sure either way is a good thing. Private investors are just as immediate, short term results oriented as stock holders. Maybe it is a good thing if they shut down some stores. Either way don't expect any benefit to the consumer (such as knowledgeable sales people, customer servcie, fair pricing, good selection...)

[Eargasm]

Edited

[mightymike]

The smaller ones suck anyways. They never have any of the Handwired stuff, or anything that I would want to try. Wouldn't phase me at all if they closed the smaller ones

[Flames1950]

The smaller ones suck anyways. They never have any of the Handwired stuff, or anything that I would want to try. Wouldn't phase me at all if they closed the smaller ones

The Des Moines GC never has that stuff either.....but one of the local stores has both the JTM45/100 dual-OT AND the Hendrix stack..........