In the past two months, cataloger/retailer Guitar Center tried, but failed, to acquire South Bend, IN-based cataloger The Woodwind & the Brasswind. This week, though, its acquisition of the multititle mailer has been approved—and for less money than it had originally offered.
Judge Harry Dees of the U.S. Bankruptcy Court in South Bend on Tuesday approved a deal whereby Westlake Village, CA-based Guitar Center will acquire The Woodwind & the Brasswind for $29.5 million — $7.6 million less than its November offer of $37.1 million. The sale is expected to close by Feb. 15.
Founded in 1978 by former Notre Dame University music instructor Dennis Bamber, The Woodwind & the Brasswind is the nation’s third-largest music instrument merchant, recording 2005 sales of about $136 million. The company has approximately 200 employees. Its catalogs include Music 123 Drum Catalog, Inspirational Pro Audio Visual, and Gifts of Note.
The $2.03 billion Guitar Center owns Medford, OR-based cataloger Musician’s Friend, which had sales of $391.7 million in 2006.
On Nov. 22, Guitar Center officials had agreed to acquire substantially all the assets of The Woodwind & the Brasswind under section 363 of the U.S. Bankruptcy Code. The transaction was subject to a number of conditions, including bankruptcy court approval. But on Dec. 20, Guitar Center announced that the purchase agreement had been terminated after the court approved instrument maker Steinway Musical as the lead bidder in a stalking-horse auction.
Steinway offered $40.5 million for Woodwind & the Brasswind, but it withdrew the offer on Jan. 15, saying that its due diligence process uncovered certain closing conditions that wouldn’t be met if it acquired the company.
As to why Guitar Center’s latest bid was significantly lower, a published report says it had everything to do with the Woodwind & the Brasswind’s successful Christmas season. Holiday sales enabled the company to reduce its inventory and pay down its debt, which went from about $25 million in November to about $18 million.