Guitar Center, Inc. Announces Agreement to Acquire Veneman Music Company, Inc

Business Wire, April 24, 2000

Business Editors

AGOURA HILLS, Calif.--(BUSINESS WIRE)--April 24, 2000

Guitar Center, Inc. (Nasdaq NMS: GTRC), the nation's largest multi-channel musical instrument retailer, today announced that it has signed a definitive agreement to acquire Veneman Music Company, Inc., a musical instrument retailer based in Rockville, Maryland.

Veneman Music has been a musical instrument retailer for over 20 years, with one store in Rockville, Maryland and one satellite store in Springfield, Virginia, as well as a catalog and Internet business. As part of the transaction, Guitar Center will purchase Veneman's existing inventory of musical instruments and equipment. Guitar Center will operate the Rockville location, which will be remodeled into the Guitar Center format and Veneman's Springfield location will be closed. Guitar Center will also integrate Veneman's catalog and Internet mailing lists into its existing more than four-million-name list. Several high level sales personnel will also be redeployed into Guitar Center and will be relocated to the Company's store in Fairfax, Virginia.

"We are very excited about the acquisition of Veneman Music," said Barry Soosman Executive Vice President Corporate Development. "The acquisition will benefit Guitar Center in several ways. The conversion of Veneman's Rockville, Maryland location to a Guitar Center store will strengthen our presence in the greater Washington D.C. area, which ranks as one of the top five retail markets in the U.S. This acquisition facilitates the opening of a new Guitar Center store in a market that has a very difficult barrier to entry for real estate, and in addition, the store is in a strategically located site off of Rockville Parkway and has a very strong, established customer base. This new store, which will be our third in this market, also allows us to continue our strategy of leveraging advertising and marketing costs across several stores in more expensive areas."

The transaction is expected to close this month. Terms of the transaction have not been announced. The completion of the acquisition may be subject to customary regulatory approvals.

Guitar Center is the nation's leading retailer of guitars, amplifiers, percussion instruments, keyboards and pro-audio and recording equipment. The Company presently operates 71 stores in 35 major markets and 4 stores in secondary markets. Musician's Friend, Inc., a wholly owned subsidiary of Guitar Center, Inc., is the largest catalog and Internet retailer of musical instruments in the United States through the Musician's Friend catalog and its website, www.musiciansfriend.com.

This press release contains certain forward-looking statements relating to new stores Guitar Center expects to open in 2000. Statements regarding new store opening plans are based largely on the Company's current expectations and are necessarily subject to associated business risks related to, among other things, the timely construction, staffing and merchandising of those stores and other matters, some of which are outside of the Company's control. Statements regarding the growth of Internet sales reflect the relatively small historical base for those sales and do not imply continued growth at historical rates. In light of these risks, there can be no assurance that the forward-looking statements contained in this press release will in fact be realized. For a further discussion of risks associated with the Company's business, please see the discussion under the caption "Risks Related to the Business" in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 which has been filed with the Securities and Exchange Commission.