Bain Capital has agreed to buy Guitar Center, a US retailer with more than 210 stores, in a transaction valued at $2.1 billion (€1.6 billion), including the assumption of debt.
The transaction follows an auction process led by Goldman Sachs. Under terms of the agreement, stockholders will receive $63 per share in cash, representing a 26 percent premium over the 26 June closing price of Guitar Center shares.
Expected to close in the fourth quarter of 2007, the deal is subject to customary closing conditions and shareholder approval.
Guitar Center’s brand recognition, loyal customer base and growth track record are among the reasons the company is an attractive targed, said Bain managing director Jordan Hitch in a statement.
Guitar Center was at one point a portfolio company of San Francisco private equity firm Weston Presidio.
Goldman Sachs was the financial advisor to the special committee of Guitar Center’s board of directors, which was also advised by Peter J. Solomon Company. Latham & Watkins provided counsel to the Guitar Center, while Bingham McCutchen provided counsel to the special committee. JPMorgan, Lehman Brothers and Kirkland & Ellis advised Bain Capital.
In separate news, Bain Capital’s German arm announced a deal today: the purchase of Bavaria Yachtbau, a yacht manufacturer based in Giebelstadt / Würzburg. In the last fiscal year, the company’s staff of 620 produced about 3,500 yachts and has sales of approximately €271 million.
The acquisition is expected to be completed on 31 July, pending approval of antitrust authorities.
Bain has previously invested in the international sports and leisure market, such as its $62.9 million purchase of German outdoor recreation products company Jack Wolfskin, and its participation in a $960 million joint investment in Bombardier Recreational Products, a Canadian maker of jet skis, sport boats and outboard motors.
Founded in 1984, Bain Capital is the eighth-largest private equity firm in the world, according to the PEI 50, a ranking of the world’s top 50 firms by sister publication Private Equity International. In the past five years, the firm has raised more than $17.3 billion in capital.