Guitar Center Agrees to $2.1B Bain Bid

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.”