Guitar Center Inc. said Wednesday that it agreed to acquire a privately held Maryland-based instrument retailer for $90 million. Guitar Center will pay $90 million for the Music & Arts Center chain, which includes 60 retail stores and seven instruction centers.
The deal is significant for Guitar Center because it allows the Westlake Village-based company to build the music education side of its business and reach musicians at an earlier age. It will also nearly quadruple the number of stores Guitar Center has. Guitar Center has operated 138 stores in 33 states.
As part of the transaction, Guitar Center will assume about $8 million in debt and deferred obligations. The deal is expected to close, pending regulatory approval, during the second quarter.
Guitar Center also released earnings on Wednesday. For the fourth quarter ended Dec. 31, the musical instrument retailer reported net income of $27.1 million (95 cents per diluted share), compared to $19.7 million (78 cents per share) in the like-period quarter of 2003. Net sales rose to $468.9 million from $ 395.8 million for the same quarter of last year.
The company estimates first-quarter 2005 net sales to be in the range of $390.6 million to $399.0 million and diluted earnings per share to be between 48 cents and 52 cents.
Shares of Guitar Center rose 3.2 percent to $59.10 in afternoon trading.
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