Fender Musical Instruments Corp, whose guitars have been used by music legends including Jimi Hendrix and Eric Clapton, expects its initial public offering to raise as much as $160.5 million, potentially valuing the company at about $395 million.
Formed in the 1940s by Leo Fender, the company was the first to mass produce solid-body Spanish-style electric guitars, including the iconic Stratocaster.
Fender expects to sell 10.7 million shares at between $13 and $15 apiece.
It expects to have 26.4 million shares outstanding after the offering and will have a market value of about $395 million, based on the top-end of its price range.
"Brand name offerings generally do well because investors gravitate towards companies that have been in business for a really long time," said Scott Sweet, managing partner at IPO Boutique, an initial public offering research firm.
"The demand for its shares will be good," he added.
The company is valued at about 20 times its 2011 net income. Fender's closest rival is privately held Gibson Guitar Corp.
The company will sell 7.1 million shares, while private equity firm Weston Presidio will sell 3.5 million shares.
Post-IPO, Weston Presidio will own about 17.7 percent of the company. The firm owns 43 percent of Fender currently.
Fender had filed for an offering of up to $200 million in March.
The company said it does not anticipate paying cash dividends currently.
J.P. Morgan, William Blair, Baird, Stifel Nicolaus Weisel and Wells Fargo Securities would be underwriting the offering, the company said in a filing with the U.S. Securities and Exchange Commission.
Fender, which expects to use the proceeds of the IPO to repay debt, said it sees guitars grow in popularity in the emerging markets such as India and China.
The company, which sells its products in over 85 countries, also intends to create a specialty sales force in North American to focus on selling its non-Fender branded instruments and accessories.
Aside from its namesake brand, Fender's portfolio also includes brands such as Squier, Gretsch, Jackson, Charvel, EVH (Eddie Van Halen) and Starcaster among others.
Fender, which had net sales of $700.6 million in the fiscal year ended January 1, 2012, said it plans to apply to list on the Nasdaq under the symbol "FNDR."
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