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Not Going Public After All

Fender Musical Instrument Corp (FMIC) filed with the SEC in March to carry out an initial public stock offering (IPO). Four months later all was set to take place today, Friday, July 20, 2012, but on the eve of the IPO being launched they decided against moving forward.

All this week news was filtering out about the expected $13 to $15 a share stock price and the quantity of share included in the IPO was pegged at 10.7 million shares. The company planned to sell 7.1 million shares of it’s own shares, while private equity firm Weston Presidio planned to sell 3.5 million shares. Weston Presidio owns 43 percent of Fender currently. But then Thursday evening, FMIC CEO Larry Thomas called the whole thing off and announced, “Current market conditions and concerns about economic conditions in Europe do not support completing an initial public offering at what we believe to be an appropriate valuation at this time.”

According to a filing this month with the Securities and Exchange Commission, Fender planned to have a total of about 26.4 million shares outstanding after going public, which would have valued the company at around $395 million. J.P. Morgan, William Blair, Baird, Stifel Nicolaus Weisel and Wells Fargo Securities were to underwrite the offering.

In general, the entire IPO market has been effected not only by the World Economy but most recently by the troublesome Facebook IPO and the backlash against problems that arose during and immediately after Facebook went public. Several companies have withdrawn their IPO filings in recent months, as volatile markets make it difficult to pitch and price the debuts.

Fender, which had net sales of $700.6 million in the fiscal year ended Jan. 1, planned to list on the Nasdaq under the symbol “FNDR.”

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Comments

5 Responses to “Not Going Public After All”
  1. Sneaky Pete says:

    Wait a minute…does this mean we’ll have to tell the world where Fender guitars are actually made..?..and what our mark-up is on them…?

    • TDPRI TDPRI says:

      No. It doesn’t mean that at all. Though if they had gone public they would have had to disclose their sales numbers and future plans, etc.

      FMIC already tells everyone where every guitar is made and no company that I can think of, public or private, discloses the markup on their products. Do you know where every part of your car is made? And do you know what the markup is on your TV? So, why should you expect FMIC be any different?

    • TDPRI TDPRI says:

      Thanks for posting that. It helped fill in the blanks that we could only guess at. I think it’s obvious that FMIC abandoned the IPO because the offering’s underwriters just couldn’t find enough buyers at $13 a share that were eager to own the company.

  2. mcpharm says:

    Thank God. If Fender went public, it would have been the beginning of the end. Craftsmen would be replaced with machines (even more than they are now), quality would eventually suffer and 95% of all production would have been shipped overseas, all in an effort to limit costs to please shareholders. Then it would have been bought by the Bain Capitals of the world to be gutted and sold to another company who would have made it unrecognizable.

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