Guitar Center (NASDAQ:GTRC)
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Guitar Center, Inc. (Nasdaq GS: GTRC) today announced that it has signed
a definitive agreement to be acquired by affiliates of Bain Capital
Partners, LLC, a leading global private investment firm. The total
transaction value, including assumed debt, is approximately $2.1 billion.
Under the terms of the merger agreement, stockholders will receive
$63.00 in cash in exchange for each share of Guitar Center common stock
they own. This represents a 26% premium over the closing price of Guitar
Center’s shares on June 26, 2007.
This agreement represents the culmination of an auction process, led by
Goldman, Sachs & Co., to solicit interest in a potential acquisition of
the Company. The Board of Directors of Guitar Center, acting on the
recommendation of a Special Committee of independent directors, has
approved the merger agreement and recommends that Guitar Center
stockholders support the transaction.
The transaction is expected to close in the fourth quarter of 2007 and
is subject to customary closing conditions, including the approval of
Guitar Center’s stockholders.
Marty Albertson, Chairman and Chief Executive Officer of Guitar Center,
stated, “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. Following a comprehensive review
process, our Board of Directors concluded this transaction is in the
best interests of our Company and our stockholders and it has the full
support of the management team. Bain Capital has a successful track
record and significant investment experience in the retail industry and
we look forward to partnering with them going forward. 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 our websites.”
“As the leading retailer of musical
instruments in the U.S., Guitar Center enjoys great brand recognition
among musicians nationwide, a loyal customer base, and a track record of
significant growth,” said Jordan Hitch, a
Managing Director at Bain Capital. “We look
forward to working with the Company’s
experienced and capable management team to continue to build the
business.”
Goldman, Sachs & Co. served as financial advisor to the Special
Committee of the Guitar Center Board of Directors and rendered a
fairness opinion in connection with the proposed merger. Peter J.
Solomon Company also served as financial advisor to the Special
Committee and rendered a fairness opinion in connection with the
proposed merger. Latham & Watkins LLP acted as counsel to the Company
and Bingham McCutchen LLP acted as counsel to the Special Committee. For
Bain Capital, JPMorgan and Lehman Brothers acted as financial advisors,
and Kirkland & Ellis LLP served as legal counsel.
About Guitar Center
Guitar Center is the leading United States retailer of guitars,
amplifiers, percussion instruments, keyboards and pro-audio and
recording equipment. Our retail store subsidiary presently operates more
than 210 Guitar Center stores across the United States. In addition, our
Music & Arts division operates more than 95 stores specializing in band
instruments for sale and rental, serving teachers, band directors,
college professors and students. We are also the largest direct response
retailer of musical instruments in the United States through our wholly
owned subsidiary, Musician’s Friend, Inc.,
and its catalogs and websites, including www.musiciansfriend.com,
www.guitarcenter.com, www.wwbw.com
and www.music123.com. More
information on Guitar Center can be found by visiting the Company’s
web site at www.guitarcenter.com.
About Bain Capital Partners:
Bain Capital (www.baincapital.com)
is a global private investment firm that manages several pools of
capital including private equity, high-yield assets, mezzanine capital
and public equity with approximately $50 billion in assets under
management. Since its inception in 1984, Bain Capital has made private
equity investments and add-on acquisitions in over 240 companies around
the world, including such leading retailers and consumer companies as
Toys “R” Us,
Michaels Stores, Burger King, Warner Music Group, Burlington Coat
Factory, Dunkin’ Brands, Shopper's Drug Mart,
Dollarama and Staples. Headquartered in Boston, Bain Capital has offices
in New York, London, Munich, Hong Kong, Shanghai, and Tokyo.
Forward-Looking Statements
This document includes statements that do not directly or exclusively
relate to historical facts. Such statements are “forward-looking
statements” within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. These forward-looking statements include statements
regarding benefits of the proposed transaction, future performance,
financing for the transaction and the completion of the transaction.
These statements are based on the current expectations of management of
Guitar Center. There are a number of risks and uncertainties that could
cause actual results to differ materially from the forward-looking
statements included in this document. For example, among other things,
(1) Guitar Center may be unable to obtain regulatory approvals required
for the transaction, or required regulatory approvals may delay the
transaction or result in the imposition of conditions that could have a
material adverse effect on Guitar Center or cause the parties to abandon
the transaction; (2) conditions to the closing of the transaction may
not be satisfied; (3) the transaction may involve unexpected costs,
unexpected liabilities or unexpected delays; (4) the businesses of
Guitar Center may suffer as a result of uncertainty surrounding the
transaction; (5) the financing required for Bain Capital to complete the
transaction may be delayed or may not be available; and (6) Guitar
Center may be adversely affected by other economic, business, and/or
competitive factors. Additional factors that may affect the future
results of Guitar Center are set forth in its filings with the
Securities and Exchange Commission, which are available at www.sec.gov.
Unless required by law, Guitar Center undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Guitar Center intends to file a proxy statement with the SEC in
connection with soliciting proxies from stockholders for a special
meeting of stockholders to be held for the stockholders to consider and
vote upon the adoption of the merger agreement described in this press
release. Copies of the proxy statement and related proxy filings filed
by Guitar Center with the SEC will be available without charge at the SEC’s
website at www.sec.gov. The directors
and officers and certain other employees of Guitar Center may be deemed
to be participants in the solicitation of proxies for the special
meeting. Information about the interests of such persons in the merger
can be found in Guitar Center’s most recently
filed definitive proxy statement and Annual Report on Form 10-K, and
also will be included in Guitar Center’s
proxy statement for the special meeting. STOCKHOLDERS ARE URGED TO READ
GUITAR CENTER’S PROXY FILINGS AND RELATED
PROXY MATERIALS FOR THE SPECIAL MEETING AS THEY WILL CONTAIN IMPORTANT
INFORMATION.