X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WESTLAKE VILLAGE, CA-The Guitar Center Inc. has agreed to be acquired by private equity Group Bain Capital Partners for $2.1 billion in the latest example of the appetite that private equity firms have developed for retailers. The Guitar Center, which operates a chain of more than 300 locations selling guitars and other musical instruments, becomes the latest target of private equity firms acquiring retail companies.

Bain, which has made its name in the retail world with buyouts like the $6 billion acquisition of Michaels Stores Inc. last year, has agreed to pay Guitar Center stockholders $63 in cash in exchange for each share of Guitar Center common stock they own, a 26% premium over the closing price of Guitar Center’s shares on June 26. The transaction, which includes the assumption of Guitar Center debt by Bain, is expected to close in the fourth quarter of this year, subject to customary closing conditions that include the approval of Guitar Center’s stockholders.

The deal between Bain and Guitar Center represents the culmination of an auction process that was led by Goldman, Sachs & Co., with the board of Guitar Center acting on the recommendation of a special committee of independent directors. Marty Albertson, chairman and chief executive officer of Guitar Center, commented that the deal “has the full support of the management team.”

The Guitar Center, which began with one store in Hollywood in 1959, now operates 210 Guitar Center stores across the US. In addition, its Music & Arts division operates more than 95 stores specializing in band instruments for sale and rental, serving teachers, band directors, college professors and students. The company is also the largest direct response retailer of musical instruments in the US through a wholly owned subsidiary, Musician’s Friend Inc.

Boston-based Bain Capital manages several pools of capital with approximately $50 billion in assets under management. Since its inception in 1984, it has made private equity investments and add-on acquisitions in more than 240 companies around the world, including Toys “R” Us, its acquisition of Michaels Stores in partnership with the Blackstone Group, Burger King, Warner Music Group, Burlington Coat Factory, Dunkin’ Brands, Shopper’s Drug Mart, Dollarama and Staples.

The deal between Bain and the Guitar Center becomes the latest in a growing line of private equity buyouts of retailers in recent years, including Dollar General’s agreement in March to be acquired by Kohlberg Kravis Roberts for $7.3 billion in a transaction that is expected to close in the third quarter. In another private equity buyout this year, Apollo Management acquired Claire’s Stores Inc. for $3.1 billion.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.