FMIC (Fender) Files to Go Public
Millions of guitar players own a Fender guitar, but now they have an opportunity to own a bit of the company that makes them, as well. Fender Musical Instruments Corp., said in regulatory filings today that it plans to sell as much as $200 million worth of stock in an initial public offering.
Some shares will be sold by Fender and some by FMIC individual owners, the Scottsdale, Arizona-based company said today in a regulatory filing. JPMorgan Securities LLC and William Blair & Co. LLC are advising on the proposed offering. No further details were announced.
“We intend to extend our reach to a broader global consumer base,” Fender said. The brand is “closely associated with the birth of rock ‘n roll and has a strong legacy in music and in popular culture.”
About $100 million of the initial public offering’s proceeds will go to pay debt, said FMIC. Fender intends to list the “FNDR” symbol on the Nasdaq, but didn’t set a price target on its stock. The company also did not say when it intends to go public.
Fender said it posted net income attributable to common stockholders of $3.2 million in 2011, from a net loss of $17.3 million the year before. Revenue grew 13 percent to $700.6 million from $617.8 million.
The market for musical instruments was worth $15.8 billion globally in 2010, according to the filing.
More info on this development when it becomes available.
I wonder how much they’ll go for. In the musical instrument industry, they still have a very strong hold of the market. I just don’t know how good their management is.
I worry about quality when companies go public. It becomes even more about the bottom line than it is already.
If the IPO offers shares in the $10-$20 range, they will sell out quickly.
I agree with natrontheape. When a company goes public, it’s first concern is to satisfy shareholders…period. Everything else is secondary. It looks as if history is repeating itself…can anyone say “CBS?” BTW, when I’m not playing my telecaster I’m a professional stock broker.
First of all read the filing its a fascinating document. It covers the whole guitar market, Answers lots of questions about wood sourcing ( Fender has a problem like Gibson does with Brazilian Rosewood but in Germany), suppliers how and why the guitars are marketed. Fender sells through over 13000 independent retailers as well as the big chains. I found the fact that Fender spends over ten million dollars on research and design a year very interesting they are not just selling vintage teles anymore. The current CEO of Fender is a former CEO of Guitar center having started there as a salesman in 1977. And it seems Peavy is trying to fight Fenders trademarks on the headstock designs.
As to a repeat of the CBS takeover its not the same at all. CBS bought Leo’s Company this was a move from a small private company to a corporate division model. A lot changed under CBS some good, some bad and the available technology at the time had as much to do with the low quality as anything management did.
But the current FMIC is owned by a number of companies two major share holders are Japanese Musical instrument distributors and the majority equity holder is a private equity company called Weston Presidio that owns shares in a whole stable of companies such as Jet Blue, DTS, Applebee’s, Guitar Center, Restoration Hardware, and on an on.
There goal is to maximize profits for investors just like it was for CBS. The most important factor is that the offering will not be for the company, its only a partial sale of shares with a substantial holding still kept by the current owners. Until we see more details we won’t know how much of the company will actually go public.
But I don’t see why the company would be run any differently than it is now, Fender doesn’t have a funded pension plan to raid, they already have debt and the offering is done in part to pay down that debt so the usual ways that Private equity companies run a business into the ground before an IPO are missing.
From what I can tell the offering is being made to reduce the 256 million in debt the company holds by 100 million that leaves another 100 million to be split by the owners not a bad deal but hardly, especially after fees etc a fire sale or a bailing out by those that currently own the company.
I wouldn’t buy the shares unless you just want to own part of the company that made your guitar. The financials don’t look that great and among other things the debt owed to Fender by Guitar Center looks like a bad sweetheart deal. Could be fun to hang a certificate next to my telecaster though.
Do you have a link to the file?
As a private company Fender already had stockholders; I don’t think much will change initially. Wait a year, see what happens.
Thanks, Warrent. Very interesting analysis.
How about taking a chunk of that money, and creating a monument to Leo Fender?!
I’m serious.
If Fender is in debt, they should sell off the brands they swallowed in the past like Charvel, Gretsch, etc. Then they could get back to making Fender guitars like they used to. All the model innovations they try, we as consumers for the most part still seem to want instruments made to the former vintage spec…. Less machines, more people employed making truly American products!
Overall I think Fender has been headed in the right direction lately. Some of their recent NAMM introductions are quite interesting and I get the impression the company is no longer attempting to rest largely on sixty-year-old guitar amp designs (though they’re still pretty much doing that with their guitars).
Some of the things I personally would love to see from Fender is beefier necks on their guitars – larger nut widths and thicker neck cross-sections. And a less ugly headstock shape – I know the current shapes (Tele/Strat) are jealously guarded trademarks, but IMHO both are hideously ugly, and a redesign is badly needed. Oh yeah, noiseless pickups standard on every guitar with single-coil pickups. In this era of 24 bit digital converters and clean digital recordings 1950′s levels of hum are no longer acceptable.
Fender Corp has done an enormous amount of good for the world of music, and I wish them well for the future. Let’s hope that with the influx of cash from the IPO they continue to create great products, and to innovate as they’ve been doing for the last year or two.
-Gnobuddy
Some of us old guys still like the original strat and tele headstocks.
i’m not an old guy and i adore the fender headstocks. changing them would be tantamount to mcdonalds losing the golden arches: they’re both american icons and priceless symbols of instant recognition.
Simple solution, keep the old headstocks on some models for those who prefer them, and put something less baroque on other models. That would keep the conservative people happy and also give some options for those who like Fender guitars but not the bulbous and visually unbalanced old headstock design.
Warrent, could you post a link to the file? Thanks.
here is the link to the filing;
http://www.sec.gov/Archives/edgar/data/767959/000119312512101896/d293340ds1.htm