Shares of Guitar Center Inc., the largest U.S. musical instrument retailer, rose 11% on Tuesday on speculation the company hired an advisor to study a possible sale.
Guitar Center stock jumped $5.04 to $52.47. Volume of 2.2 million shares was more than quadruple the daily average of the last three months.
“There have been a lot of private-equity buyouts of retail in recent years,” said William Armstrong, an analyst at CL King in Albany, N.Y.
“Guitar Center is often mentioned as a likely candidate because they dominate their market and they are debt free.”
Guitar Center did not comment.
The Westlake Village-based retailer posted first-quarter profit of $17.2 million, a 9.7% increase from a year earlier, for its biggest growth in five quarters. Sales climbed 14% to $534.5 million.
Guitar Center, which sells guitars, amplifiers, drums and keyboards, began in 1959 when former car salesman Wayne Mitchell purchased a small appliance and home organ store in Hollywood. In 1964, Mitchell converted a movie theater next door to his Hollywood shop, and opened the first Guitar Center on Sunset Boulevard.
The company, which now has more than 210 stores, went public in 1997. The stock has more than tripled since its initial share sale, and revenue last year was $2.03 billion, compared with $296.7 million in 1997.
Guitar Center this year bought musical instrument retailer Woodwind & Brasswind for about $30 million, and in 2005 acquired closely held retailer Music & Arts Center for about $90 million.