Guitar Center Buys Hermes Trading Co.

Westlake Village, CA-based retailer Guitar Center, the parent of the Medford, OR-based Musician’s Friend catalog, has signed a definitive agreement to acquire the existing inventory and equipment of Pharr, TX-based musical instruments distributor/retailer Hermes Trading Co.

The acquisition includes four retail locations in Texas, in San Antonio, McAllen, Laredo and Brownsville. As part of the transaction, Guitar Center will purchase for the four locations. The stores, which cater to the Hispanic market, will be remodeled and rebranded into Guitar Center stores.

The transaction will be funded through Guitar Center’s available cash and credit. The acquisition, which is subject to terms and conditions and may be adjusted based on the final determined inventory value, is expected to close in the second quarter. Guitar Center expects the acquired Hermes stores to offset its other store openings for 2006.

Hermes Music has been a musical instruments distributor and retailer since 1982, with sales in the U.S., Mexico and South America. Following the transaction, Hermes Music will continue to operate its distribution business and sales to customers outside the U.S. Guitar Center operates 12 stores in Texas.