Fender withdraws IPO
The guitar maker takes a look at the market and decides against going public.
By Benzinga 6 hours ago
By Brett Callwood, Benzinga Staff Writer
Fender Musical Instruments announced Friday that it would be withdrawing its planned initial public offering (IPO) based on current market conditions.
"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," said Larry E. Thomas, Fender's Chief Executive Officer, in a statement.
Fender, based in Scottsdale, Ariz., was founded by Leo Fender in Fullerton, California, back in 1946. The company went on to create the Stratocaster and Telecaster guitars, instruments that would famously be played by the likes of Jimi Hendrix, Bob Dylan, Deep Purple's Ritchie Blackmore, Buddy Guy, Keith Richards, Bruce Springsteen, Eric Clapton and David Gilmour, among many others.
In March, Benzinga reported that Fender was looking to raise $200 million through the filing.
The IPO certainly makes for fascinating reading, with Fender describing itself as a "leading, global musical instruments company whose portfolio of renowned, music lifestyle brands brings the passion of music to life. Since the founding of our predecessor company by Leo Fender in 1946, we have built a comprehensive portfolio of brands led by the iconic Fender brand and other renowned brands such as Squier, Jackson, Guild, Ovation and Latin Percussion, which we own, and Gretsch, EVH (Eddie Van Halen) and Takamine, for which we are the licensee."
Only Thursday, Seeking Alpha published a preview to Fender's IPO and stated that much of Fender's appeal comes from the quality of the brand and the loyalty of its fans. Fender is the number one company in terms of market share in its market, and some people will buy Fender stock just to own a small part of a beloved company.
According to the IPO, "the underwriters have reserved for sale, at the initial public offering price, up to approximately 535,714 shares of FNDR common stock being offered for sale to certain of our suppliers, business partners, customers, distributors, holders of more than 5% of our capital stock and artists with whom FNDR has relationships, as well as some of FNDR's officers, directors and employees and certain of their family members."
After going public, the company was hoping to have roughly 26.4 million shares outstanding. This would have valued Fender at about $395 million, but that all goes out of the window now.
It is a smart move by Fender, which may be thinking that it has lasted over half a century as a private company and for the time being should stay that way. So why dive into the public arena when the economy is so rocky? The decision to wait seems a sound one.