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Guitar Center Acquires Woodwind & Brasswind Assets for $29.9 MM
On Jan.31, Guitar Center, Inc. announced that the U.S. Bankruptcy Court for the Northern District of Indiana has approved the acquisition of substantially all of the assets of The Woodwind & The Brasswind by the company's Musician's Friend, Inc. subsidiary for approximately $29.9 million. Under the terms of the agreement, Musician's Friend will acquire substantially all of the assets of The Woodwind & The Brasswind, including its inventory of band and orchestra and combo instruments, accounts receivable, fixed assets, personal property, trade names and other intangible assets. Musician's Friend will also assume approximately $2 million of specifically identified accrued liabilities.
Marty Albertson, chairman and CEO of Guitar Center, said, "We are pleased that the Bankruptcy Court has approved our acquisition of assets of The Woodwind & The Brasswind, including the Woodwind and Brasswind and Music123 websites. This acquisition will enable us to further expand the already strong combo instrument business at Musician's Friend as well as build out our direct response band and orchestra business. We look forward to broadening our customer base through the acquisition of these well-known brand names and continuing the growth of our direct response business."
The Woodwind & The Brasswind filed for bankruptcy protection in Indiana on Nov. 21, 2006. Musician's Friend had initially entered into an asset purchase agreement with The Woodwind & The Brasswind on Nov. 22, 2006 for $39 million, but that agreement was later terminated because it was not approved by the Bankruptcy Court as a result of a higher offer from another buyer, Steinway Musical Inc. Steinway terminated its acquisition in mid-January, resulting in a new sales process which resulted in the agreement with Musician's Friend.
Guitar Center’s lower bid of $29.9 million on Jan. 31 was prompted by Woodwind & Brasswind’s 2006 holiday sales, which allowed the dealership to reduce inventory and pay down debt to its primary creditor, LaSalle Bank. Reportedly, the debt was reduced from $25 million to about $18 million currently, leading to the lower offer by Guitar Center at the end of January.
The transaction is expected to close in February 2007, according to Guitar Center. The transaction will be funded through Guitar Center's available cash and credit facility. The acquisition is subject to a limited number of conditions, and the final purchase price may be adjusted based on the determination of inventory, accounts receivable, and assumed liability levels as of the closing.
Woodwind & Brasswind, based in South Bend, Ind., employs approximately 200 and had about $136 million in sales in 2005. The company filed for bankruptcy protection in November after a $9 million judgment against the business by the Zapf brothers, the former owners of Music123 and one-time partners of Woodwind & Brasswind founder Dennis Bamber.
On Jan.31, Guitar Center, Inc. announced that the U.S. Bankruptcy Court for the Northern District of Indiana has approved the acquisition of substantially all of the assets of The Woodwind & The Brasswind by the company's Musician's Friend, Inc. subsidiary for approximately $29.9 million. Under the terms of the agreement, Musician's Friend will acquire substantially all of the assets of The Woodwind & The Brasswind, including its inventory of band and orchestra and combo instruments, accounts receivable, fixed assets, personal property, trade names and other intangible assets. Musician's Friend will also assume approximately $2 million of specifically identified accrued liabilities.
Marty Albertson, chairman and CEO of Guitar Center, said, "We are pleased that the Bankruptcy Court has approved our acquisition of assets of The Woodwind & The Brasswind, including the Woodwind and Brasswind and Music123 websites. This acquisition will enable us to further expand the already strong combo instrument business at Musician's Friend as well as build out our direct response band and orchestra business. We look forward to broadening our customer base through the acquisition of these well-known brand names and continuing the growth of our direct response business."
The Woodwind & The Brasswind filed for bankruptcy protection in Indiana on Nov. 21, 2006. Musician's Friend had initially entered into an asset purchase agreement with The Woodwind & The Brasswind on Nov. 22, 2006 for $39 million, but that agreement was later terminated because it was not approved by the Bankruptcy Court as a result of a higher offer from another buyer, Steinway Musical Inc. Steinway terminated its acquisition in mid-January, resulting in a new sales process which resulted in the agreement with Musician's Friend.
Guitar Center’s lower bid of $29.9 million on Jan. 31 was prompted by Woodwind & Brasswind’s 2006 holiday sales, which allowed the dealership to reduce inventory and pay down debt to its primary creditor, LaSalle Bank. Reportedly, the debt was reduced from $25 million to about $18 million currently, leading to the lower offer by Guitar Center at the end of January.
The transaction is expected to close in February 2007, according to Guitar Center. The transaction will be funded through Guitar Center's available cash and credit facility. The acquisition is subject to a limited number of conditions, and the final purchase price may be adjusted based on the determination of inventory, accounts receivable, and assumed liability levels as of the closing.
Woodwind & Brasswind, based in South Bend, Ind., employs approximately 200 and had about $136 million in sales in 2005. The company filed for bankruptcy protection in November after a $9 million judgment against the business by the Zapf brothers, the former owners of Music123 and one-time partners of Woodwind & Brasswind founder Dennis Bamber.
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