Klarinet Archive - Posting 000052.txt from 2007/02

From: "Kevin Fay" <kevin.fay.home@-----.net>
Subj: RE: [kl] Guitar Center acquiring Woodwind/Brasswind...
Date: Wed, 07 Feb 2007 00:41:13 -0500

David Kumpf posted:

<<<Doing research on something else, and came across this:

http://biz.yahoo.com/e/070205/gtrc8-k.html

Apologies if this was discussed before, did not realize that this was in
the works.>>>

This is actually new news.

The old news was that Guitar Center was going to buy the assets of WW&BW for
~$37.1 million and assume ~$2 million in liabilities. The Bankruptcy Court
didn't allow that to go forward, though, because Steinway (owner of
Conn-Selmer) made a competing offer for ~$40.5 million.

I'd have to delve much deeper than I care to, but it seems to me that the
largest domestic manufacturer of wind instruments might have a legal problem
or two purchasing what is likely the largest single domestic retailer. Even
if there weren't any potential antitrust problems, C-S would sure be buying
into a headache or two from their dealer body.

In any event, the newer old news was that C-S thought long and hard, and
decided that it didn't want to buy WW&BW after all.

. . . which left the previously jilted bride ready willing and able to step
in, checkbook open. In the agreement filed as an exhibit to GC's 8-K, the
amount to be paid is only $29.9 million (plus assumption of ~$2 million in
liabilities) - meaning that $7.2 million has been lopped off of the purchase
price by the C-S maneuver.

Now, it's entirely possible that WW&BW sloughed off $7.2 million in
inventory in the intervening period - but I doubt it. It's equally possible
that the whole process left Dennis Bamber and the bankruptcy trustee in an
undesirable bargaining position (i.e., "screwed").

I feel for Mr. Bamber - I had nothing but good dealings with his company
over the years. I *do* wonder what the heck Steinway was thinking when they
made their bid - perhaps payback for years of volume discounts, who knows.

In any event, I'll be buying all of my stuff from Fred Weiner until the dust
settles.

kjf

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