Tweeter Group Launches IPO

Canton, MA-based Tweeter Home Entertainment Group (NASDAQ: TWTR) has gone public. Last Thursday, July 16, the East Coast audio and video retailer launched an initial public stock offering of 2.71 million shares at an offering price of $17/share.

The IPO was followed by a post-offering of an additional 6.082 million shares. Actual opening price on day one was $20/share. The IPO didn't follow the spectacular trajectory of many recent IPOs, which tripled in value in a few hours after opening, only to close well below the offering price. Tweeter stock rose modestly to $21.12, sank to $17.75, and closed Friday at $18.25.

Previously known as New England Audio, Inc., the 26-year-old company has aggressively expanded in the past two years. NEA operated the many successful Tweeter, Etc. stores in four New England states before acquiring King of Prussia, PA-based Bryn Mawr Stereo & Video in 1996, which gave it an additional 15 stores and a strong presence in the mid-Atlantic states. Last year, Atlanta's 10-store HiFi Buys chain was acquired, providing NEA with a solid foundation for expansion into the Southeast. The HiFi Buys acquisition boosted the company's revenue above the $200 million mark, from $80 million the year before.

The Tweeter Group has three regional distribution and service centers servicing 50 stores carrying mid- to upper-end audio, video, and autosound products. Tweeter, Etc. was named "1996 Consumer Electronics Retailer of the Year" by AudioVideo International magazine. Bryn Mawr Stereo & Video and HiFi Buys are similarly positioned retail operations.

The IPO, underwritten by PaineWebber Inc., Dain Rauschler Wessels, and BT Alex. Brown, is expected to raise more than $40 million. The launch was also a statement that Tweeter is ready to play in the big leagues with the likes of Best Buy and Circuit City, both of which have hundreds of stores and are expanding rapidly. On Friday, July 17, Best Buy (NYSE: BBY) closed up 2.5% at $51.32. Circuit City (NYSE: CC) was down 0.5% at $53.50/share.