Gibson Guitar Corp. has announced an agreement to make a strategic investment into Japan’s TEAC Corp. (TEAC). TEAC is a recognized name in audio and visual equipment, and a producer of data storage equipment and related products. The transaction was unanimously approved by both companies’ Boards of Directors.
Gibson has entered into an agreement with Phoenix Capital in which two investment funds operated by Phoenix Capital have agreed to sell to Gibson all the shares they own in TEAC Corp., or 157,447,000 shares (54.4% of the issued and outstanding shares), at a price agreed between the parties of 31 Japanese Yen per share. As this will result in Gibson acquiring more than one-third of TEAC, Japan’s Financial Instruments and Exchange Law requires Gibson to undertake a tender offer process. Thus, Gibson, through a special purpose vehicle, will make an all-cash tender offer to purchase 157,447,000 shares of TEAC common stock for 31 Japanese Yen per share in cash. Gibson will purchase a maximum of 157,500,000 shares. The tender offer period is scheduled to commence on April 1 and will remain open for 21 Japanese business days.
Upon completion of the acquisition, TEAC will become a member of the Gibson family. This will not only expand the size and reach of Gibson’s Pro Audio business, with products that both complement and build upon the KRK, Cerwin-Vega! and Stanton portfolio of studio monitors, sound-reinforcement equipment and DJ gear, respectively, in addition to the consumer electronics of strategic partner Onkyo Corp., but also, in future product development, has the potential to add value to the Gibson MI segments and even the fretted instrument category.
Commenting on the transaction, Henry E. Juszkiewicz, Chairman and CEO of Gibson, said, “We are delighted to welcome TEAC and its talented employees to the Gibson family. We have both known each other for a long time and share a vision for the future: bringing together world-class engineering and technical innovation in the audio space with the world’s premier musical instrument manufacturer, and the capability to market music innovation on a global scale.”
This transaction is expected to bring about substantial synergies in joint marketing and global distribution, creating benefits for both companies.