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Wednesday, June 27, 2007

Bain Capital Buy's 305 store Music chain for $1.9 billion

Bain Capital Partners LLC anounced that they will purchase Guitar Center for $64 per share or a total of about $1.9 billion ($2.1 billion including debt).

Guitar Center stock owners will receive a 26% premium on their stock.  The most significant aspect of this deal is that Guitar Center is going private.  More and more companies are going private to escape the regulatory scrutiny of the open exchange and of legislation such as Sarbanes Oxley.

Regulartory escapism was not noted by either the purchasing nor selling company, however, many retailers have been jumping on this trend over the last few years.  It provides companies with operating flexibility, a reduced emphasis on quarterly results and an increased ability to wheel and deal on complex price negotiations that would not receive favorable accounting treatments if the company were public. 

Bain Capital has a history of purchasing niche retail stores and businesses from Burger King to Staples.  The company is moving 'privately' into a wide range of retail from burgers to paper to mixer boards to chandeliers

For more information on this acquisitionsee Bain to Buy Guitar Center In Deal Valued at $1.9 Billion