Fender withdraws IPO

The guitar maker takes a look at the market and decides against going public.

By Benzinga Jul 20, 2012 12:41PM
Image: Two guitarists (© Nicholas Monu/iStock Exclusive/Getty Images)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.



More from Benzinga
43Comments
Jul 20, 2012 4:49PM
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Smart move by Fender and will only support it's image as an icon of music....not the almighty dollar.

Jul 20, 2012 3:55PM
Jul 20, 2012 5:57PM
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The best news I've heard in a long time!!!!! Don't sell out to the wall street criminal cartel and enslave your great company to the greed monger corporate welfare whores that run/ruined americas corporations. First thing they'd do is appoint a board. Second, the board would figure out how to ship the rest of the manufacturing to asia to maximize their profits. Third, the board would take turns voting each other to the ceo position for a year or two and get paid insane bloated salaries. After 5-10 years and cheapening the product and screwing their customers, they'll claim bancruptcy and write it all off on their taxes. Just ask mitt robme or donald tramp - they're experts at it............
Jul 20, 2012 5:52PM
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Thank God Fender did not SELL ITS SOUL!!!

 

Jul 20, 2012 7:43PM
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dear fender.... plz keep your focus on the quality of the instruments, not shareholder value. thanks
Jul 20, 2012 6:25PM
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The writer of this article forgot who put them on the map as far as guitars go!  Buddy Holly!!!  They do build some great guitars unlike Gibson which is building garbage now.  I saw 3 new Gibsons at Guitar center whoes bodies looked like they were full of bondo all wavy and uneven.  These were new guitars too!  The Fenders all looked great, however the ones from Indonesia and China are not so great.  Gibson needs to take a good look at their quality and quit using coagulated spam jelly to build guitars with.  If you are Joe Walsh or Jimmy Page Gibson will build you a great guitar but their retail guitars suck!!  Old Les would be ashamed at what his name is on now!
Jul 20, 2012 6:52PM
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Good. Keep the company private and focus on even FURTHER quality control; I am a lifetime Fender guy and if Fender keeps it up (and hopefully improves), I don't see that changing for me. Gibsons sound great, but so do Fenders; totally different animals and both can rock, for sure. But Fenders just have an "at home" comfort and feel. Plus, I will take Fender bite over Gibson growl anyday. Fender is the BEST! Les Paul's are good, but to most people, I would be willing to say, would agree (after actually spending some time with one) that a Fender neck is hands down the best neck in the biz. Very cozy and much more so than any Gibson. That's why the best rock guitarists play Fenders, or so-called "Super Strats" (Ibanez, Jackson/Charvel etc.) . . . Eddie, Eric Johnson,Yngwie, Vai, Satriani, Cooder, Stevie Ray, Trower, Knopfler, Lynch, De Martini, Jerry Cantrell (G&L), Cropper, Cray, Mike Stern, John 5, Dave Murray, Adrian Smith  etc,etc, etc. Then just add that to the list in the article. Sure, a lot of great players play Gibsons (Page, Wylde, Slash), but . . . Fender obviously rules.
Jul 20, 2012 6:39PM
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Yes, Bruce, CBS bought Fender in late 1964, but SOLD it in the early 80s to a group headed by some employees (and bought if for less than CBS bought if for). The first reissues of classic Fenders followed, along with the Squiers (which have come a LONG way in quality) and eventually the American Standards and Mexican Standard line. I think Fender is quite proud of Leo's legacy and has done well in upholding it.
Jul 20, 2012 7:28PM
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I have a PRS Modern Eagle LTD that cost me 5,000. I have a 2007 Fender American Strat that I paid 700 for. I prefer the Strat. Nothing compares to an American made, Maple neck Strat.
Jul 20, 2012 7:22PM
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 I hope  Fender remains in private hands. and in control of the instruments quality Fender has always been my favorite ax.
Jul 20, 2012 6:40PM
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The symbol should be DTFR for dented Fender.  Put out a bunch of crap from overseas that won't pass muster with an amateur...maybe they're holding off to bring the jobs home and start making quality guitars again instead of the junk from overseas.
Jul 20, 2012 6:24PM
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Keep in mind that this is not the Fender that Leo founded.  That fender was acquired by CBS back in the 60's.  This is a new incarnation of Fender, so don't go getting all misty-eyed.  I miss my pre-CBS P-bass.
Jul 20, 2012 6:09PM
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I have a Stratocaster called " None More Black" and supposedly only 300 were made. It's got an ebony neck and no fret markers on the face of the fret board. It's gloss black with silver letters saying Fender. It's a beautiful guitar that plays real nice. I use it for some songs but I have always prefered Gibson guitars. I play  an 1961 Les Paul/Sg Reissue with 1957 wound pickups most of the time. It has more growl and natural distortion then a Fender...But, both are very nice guitars...
Jul 20, 2012 6:07PM
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I've had my Fender Custom Shop American Strat since about '91, and it's been a fantastic workhorse!  It makes me smile to know they're not going public........................good to know there's still some common sense out there!
Jul 20, 2012 5:55PM
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been playing Fenders since 1956...some nof the best around..got every one I ever bought
Jul 20, 2012 6:19PM
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Fender makes a unique guitar.....Strats and Teles have a tone of their own.....They need to stay private and focus on making their instruments and amps the best they can be...don't mess with a good thing.  To hear what a Strat sounds like, look up Zocko Groendal on iTunes.
Jul 20, 2012 7:43PM
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dear fender.... plz keep your focus on the quality of the instruments, not shareholder value. thanks
Jul 20, 2012 6:07PM
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Good for them. They'd be better off selling the company before going public in any market condition.
Jul 20, 2012 6:07PM
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Fender unlike FB is a time proven product.   FB is tanking at $28.76 down almost 1/3 from its IPO.  So if you invested $1 billion with FB at it's IPO in two months you would have lost over $300 million.

 

Fender is clearly more fiscally prudent.

Jul 20, 2012 6:40PM
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The symbol should be DTFR for dented Fender.  Put out a bunch of crap from overseas that won't pass muster with an amateur...maybe they're holding off to bring the jobs home and start making quality guitars again instead of the junk from overseas.
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