Fender To Bring More Clapton to China with IPO

Photographer: Stephen Albanese/Michael Ochs Archives/Getty Images

Gavin Rossdale with a Fender Stratocaster electric guitar at the El Rey Theater in Los Angeles. Close

Gavin Rossdale with a Fender Stratocaster electric guitar at the El Rey Theater in Los Angeles.

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Photographer: Stephen Albanese/Michael Ochs Archives/Getty Images

Gavin Rossdale with a Fender Stratocaster electric guitar at the El Rey Theater in Los Angeles.

Fender Musical Instruments Corp., the largest seller of guitars in the U.S., plans to sell as much as $200 million worth of shares in an initial public offering in a bid to bring more Eric Clapton to China.

The guitar maker and its investors will sell shares, the Scottsdale, Arizona-based company said today in a regulatory filing. JPMorgan Securities LLC and William Blair & Co. LLC are advising on the proposed offering. No further details were announced. San Francisco-based Weston Presidio Capital is the largest investor with 43 percent of the shares.

Fender, which traces its roots to 1946, makes the Stratocaster, or “Strat,” one of the most popular electric guitars and models inspired by musicians such as Clapton and John Mayer. The company, which increased sales 13 percent to $700.6 million last year, sees growth coming from emerging markets such as China and India as guitar-based music becomes more popular in those nations.

“We intend to extend our reach to a broader global consumer base,” Fender said. The brand is “closely associated with the birth of rock 'n' roll and has a strong legacy in music and in popular culture.”

Clapton Stratocaster

The global market for musical instruments and accessories totaled $15.8 billion in 2010, according to the filing. Fender gets about 47 percent of its sales from outside the U.S. and sells products in 85 countries. Many of its models, including an Eric Clapton Stratocaster, sell for more than $2,000. Clapton is a three-time inductee into the Rock and Roll Hall of Fame.

Founder Leo Fender sold the company to Columbia Records Distribution Corp., a division of Columbia Broadcasting System, Inc., in 1965, according to the filing. The late William Schultz and current board member William Mendello then purchased Fender in 1985.

Michael Lazarus, a managing partner at Weston Presidio, is on Fender’s eight-member board, which also includes Servco Pacific Inc. Chief Executive Officer Mark Fukunaga. Weston Presidio also has investments in Guitar Center Inc. (GTRC) and AMC Entertainment Holdings Inc.

Fender’s competition includes online sellers of new and used instruments such as EBay Inc. (EBAY) and guitar makers such as Gibson Guitar Corp., according to the filing.

The company will use $100 million from the offering to repay a portion of a senior credit facility.

Fender’s net income was $19 million last year compared to a net loss of $1.69 million in 2010.

To contact the reporters on this story: Paul Jarvis in London at pjarvis@bloomberg.net; Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net

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