Fender, Gibson guitars have plans to go public
Need to fund expansion: Musical instrument firms operate with five-year plans
Adam Tanner -- Reuters
FRANKFURT - Music lovers may get a chance to invest in the two best-known makers of electric guitars -- companies which have prospered over the past 15 years in private hands -- officials said yesterday.
The top executives at Fender Musical Instruments and Gibson Musical Instruments both said they hope to go public in the next five years after they expand their businesses.
"Our goal is to be public at some point, you know, if the opportunity arises," Gibson's chairman and part owner Henry Juszkiewicz said in an interview at the Frankfurt Musikmesse, which opened yesterday.
"The reason to be public really is that if you are a growing company -- which we are -- and you have ambitions of growing further, it's a vehicle and a capital base you can't get as a private company."
His rival at Arizona-based Fender has similar thoughts.
"The idea is there. As we grow to US$400-million or something like that we will do this so that our shareholders can get their money out of the company," said chairman William Schultz, who leads an investment group that owns Fender.
"The thing is many of them don't want out, but at least the opportunity will be there," Mr. Schultz said.
He said Fender had sales of US$240-million in 2001. Gibson earned about US$200-million, Mr. Juszkiewicz said.
The Fender chief said he was thinking about a four or five year period before going public. Mr. Juszkiewicz also mentioned five years.
The original Gibson -- Orville Gibson -- died in 1918 and the company was sold in 1944.
With the companies' fortunes down in the mid-1980s as synthesizers exploded in popularity, Harvard business school graduate Mr. Juszkiewicz and his partner stepped in and bought the company for US$5-million in 1986. The Nashville-based firm is best known for its Les Paul model played by many rock-and-roll stars including Jimmy Page.
Legendary guitar innovator Leo Fender started making electric guitars after World War Two. By the mid 1950s he had introduced the Stratocaster that Jimi Hendrix would later champion.
Fender sold his company to U.S. television company CBS Corp. in 1965 and they in turn sold the company to Mr. Schultz and his partners for US$12.5-million.
A few prominent musical instrument companies have gone public in recent years, including piano maker Steinway Musical Instruments, but most resisted the lure during the stock market boom of the 1990s.
The C.F. Martin Guitar Co., known for its quality steel-string acoustic guitars, has always remained in the family. Chris Martin is running a business his great, great, great grandfather started in 1833, making it one of America's oldest family-run enterprises.
Several guitar company owners said the need for quality in making instruments had to come before the push for profits, creating a certain reluctance to go public.
"You need that personal touch, people with a passion for the business, not a passion for the numbers," said Mr. Schultz.
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