Guitar Center to be bought by Bain Capital

NEW YORK (Reuters) - Guitar Center Inc. GTRC.O said on Wednesday it agreed to be acquired by private equity firm Bain Capital Partners LLC for about $1.9 billion plus assumed debt.

Under the terms of the deal, Guitar Center stockholders will receive $63 in cash per share, marking a 26-percent premium over its closing price on Tuesday, the musical instruments retailer said in a statement.

As of March 31, the company had 30.17 million diluted shares outstanding, as reported in its first-quarter earnings report.

Total value of the transaction, expected to close in the fourth quarter, is approximately $2.1 billion including assumed debt, the company said.

Goldman Sachs served as a financial advisor to the company.

Guitar Center shares were up 18.8 percent or $9.44 at $59.50 on the Nasdaq after hitting a high of $60.35 earlier in the session.

In May it was reported there was market speculation that Guitar Center was exploring a possible sale and had hired an investment bank to explore strategic alternatives.

Credit Suisse analyst Gary Balter said the company "seems like the perfect LBO."

"They have a dominant retail position in a high service business yet significantly under-earn other high service oriented retail segments," Balter wrote in a research note following Guitar Center's announcement.