Magazine \ Daily News \ Fender Files for $200 Million IPO

Fender Files for $200 Million IPO

Scottsdale, AZ (March 8, 2012) – Fender Musical Instruments Corp—one of the world’s leading manufacturers of musical instruments—has announced its plans to raise funds for a $200 million IPO.

Founded in 1946 by Leo Fender, the company was the first to mass-produce the modern electric guitar, creating the Stratocaster and the Telecaster in the 1950s and becoming a household name and the go-to instrument brand for some of the most highly regarded guitar players of all time, from Jimi Hendrix, Eric Clapton, and Jeff Beck to John Frusciante and Tom Morello.

CBS Inc. bought the company in 1965, owning it for almost two decades before Fender Chief Executive William Shultz and other investors purchased it in 1984. According to the SEC, the Schultz trust now owns only 6 percent of the Scottsdale, Arizona, company, while private equity firm Weston Presidio owns 43 percent. Japanese distributor Yamano Music holds the second-largest Fender stake, at 14 percent.

J.P. Morgan, Baird, Stifel Nicolaus Weisel, and Wells Fargo Securities are underwriting the offering, of which half of the proceeds will be used to pay off Fender’s $246.2 million debt. Because portions of Fender’s debt repayment will be made to the aforementioned banks, William Blair & Company will act as an independent underwriter. The remainder of the IPO’s proceeds will go toward working capital.

Fender, which reportedly netted $700.6 million in sales revenue last year, is applying to be listed on the NASDAQ under “FNDR.” The number of shares and price ranges for the IPO have not yet been determined.


     

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Comments

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Joe L.
on 03/20/2012 		Earlier this month, I had the opportunity to tour the Fender factory in Corona, as well as the new and wonderful Visitor Center there. The obvious pride and enthusiasm of the Fender workforce in Corona was reassuring to see. The careful handwork and attention to detail devoted to the production of standard (non-Custom Shop) guitars go a long way to explaining why today's Teles and Strats are the best ever made (vintage mojo notwithstanding). The fading of the Boomers may make Fender's boutique strategy seem unwise, and calls into question whether investing in this IPO makes sense. But it will be a sad day if the unique talents and spirit on display in Corona can't be preserved and protected as a monument to American (and Mexican-American) workmanship and creativity.
A. Anderson
on 03/13/2012 		What is your exact point "Guytron"? You got that rant out of your system, now what?
Guytron
on 03/13/2012 		anyone who thinks that the focus on the custom shop is the problem is in the dark about Fender.
The custom shop is consists of a handfull of builders. There is no way FMIC aligned their business strategy around profits from the Custom shop!
Weather the Custom Shop even makes a profit really doesn't matter. The Custom Shop is there as much to prop up Fenders image as anything else. GM (when profitable) doesn't make most of its money from selling Cadillacs and Corvettes. Rather it makes most of its money selling Chevy's. The same goes for Fender. It sells logarithmically more offshore guitars and amps than all the guitars and amps it makes in the Corona factory and the custom shop combined. Fender only talks about the Custom shop and Corona factory because they know it props up the Fender brand...
Guytron
on 03/13/2012 		The replies here are entertaining!
Half the replies are people who are going to invest because they play guitar and therefore somehow think that its a good investment. The other half are looking at it in a more real point of view where in the coming years the bottom line is going to make the decisions. Not good ...
Freddy Fender
on 03/12/2012 		Sounds like CBS era, part two. Here comes the junk!!
Robert French
on 03/10/2012 		There goes a great guitar maker Shot to Hell and Leo is Rolling in his grave Right NOW
George
on 03/10/2012 		There are several disadvantages to completing an initial public offering, namely: -Significant legal, accounting and marketing costs -Ongoing requirement to disclose financial and business information -Meaningful time, effort and attention required of senior management -Risk that required funding will not be raised -Public dissemination of information which may be useful to competitors, suppliers and customers
Moe - continued
on 03/10/2012 		... It would make total business sense to shut down all American production save for the Custom Shop, outsource all production, sell off assets, lay off workers, and make a quick buck Return On Investment. But for the people who care about Fender, it will be the end of an era. If you think the CBS era was bad, just wait until corporate raiders take over. Fender has become so big, they have brands that overlap the same markets. Fender should have sold off their Kaman Music, Sunn Amps brand, and the rest of the brands Fender has acquired over the years and done nothing with. I knew there was trouble when the current management moved HQ from the Corona factory to Arizona. They had lost touch with their production.
Moe
on 03/10/2012 		The reason why Fender has a "$246.2 million debt" is because: Fender has been focusing their high quality guitar production on the Custom Shop collector market. That market is shrinking as baby boomers get older. Expensive boutique guitars for collectors are unaffordable to working musicians. The next big things in rock, groups of kids who are going to change the sound of rock, aren’t going to play Fender Custom Shop guitars. Fender should have focused on making their American guitars better and more affordable, not just target the boutique customers who are non-musician collectors. Fender has been diminishing their brand name by selling OEM'ed imported products from China and other parts of Asia and rebranding them as Fender. Anything made outside the USA should be branded as Squier. Their made in China gear have steep depreciations. When Fender goes public, the deepest pockets will probably buy it and they'll want a huge ROI for their acquisition. The new owners might be some kind of vampire capitalist, vulture capitalist, corporate raider, competitor, or foreign country. The current owners don’t know what they are getting themselves into as the new owners will surely replace the management team with their cronies. The execs without golden parachutes just might be naïve enough to believe that when the IPO raises the money, that the new management will keep them. Corporations shuffle people into a division, use accounting to put all the losses on that division, and then close it. That's the corporate way. Fender, the historical brand legacy, will mean nothing to the new owners, it's just another investment in their portfolios. Now that current management has pointed Fender into the direction of rebranding China made guitars, you can guess that the new owners are going to accelerate in that direction. It would make total business sense to shut down all American production save for the Custom Shop, outsource all production, sell off a
John Perry
on 03/09/2012 		If you're buying the stock based on the Fender name, you are indeed playing the market...not investing.Not the best market for an IPO. Makes one wonder why they're making the move in the first place. Let's see the balance sheet, Statement of cash flows...etc before jumping in.



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