D&M Holdings on the Block?
By Wes Phillips April 21, 2008 — D&M Holdings, Inc., the Japanese consortium that owns Denon, Snell, Boston Acoustics, McIntosh, Escient, and Marantz, is apparently on the marketing block. Rumors to that effect have been circulating since mid-March, although the company's website, in a press release dated 04/15/08, coyly says only: "D&M Holdings, Inc. notes that recent press reports concerning the potential sale of D&M shares is not based on any information provided by the company."

Not precisely a firm denial.

Speculation on who has entered a bidding war for D&M has been heated, possibly over-heated. Audioholics listed the contenders as including Bain Capitol (owner of Kenwood), Advantage Partners LLP, Merrill Lynch, and Best Buy—which is currently D&M's largest customer.

The way the purported deal would work remains, like much else about this story, a little murky. Last March, after a rumor that Harman International was interested in purchasing D&M (and a subsequent stock surge), RHJ International SA/NV, which holds a 49% share of D&M Holdings, undertook contenders for its D&M shares and winnowed the field down to Bain, Advantage, Merrill Lynch, and Best Buy. Late last week, the news went viral, when it was discovered that Philips Electronics, which owns 12% of D&M, would also be willing to auction its shares to the same buyer RHJ International sold to—giving a controlling interest of 61% of the company to the eventual purchaser.

So will Best Buy end up owning some of the best-known names in audio? I couldn't find anyone in the industry willing to bet on it. One ex-retailer told Stereophile, "It feels like déjà vu all over again," referring to Best Buy's 2001 "leak" that it was interested in purchasing Sound Advice, an "offer" that led Tweeter to bid up the purchase price precipitously. Many industry insiders feel that Best Buy was never seriously interested in the south Florida chain, but was rather gaming Tweeter into an expansion it couldn't digest. If that was the plan, it worked.

A high-end manufacturer who makes it a hobby to read corporate profit and loss documents told Stereophile that he felt the US's current economy would discourage a bank-financed buy-out, since debt acquisition is currently such an "unclean" topic in the financial press. "Look to Asia," he said. "India and China are cash-fat right now—and both are hungry for the respect that goes with name brand luxury goods. Look at Tata Motors' purchase of Jaguar and Land Rover last month."

So there you have it. Nobody is admitting anything and "everybody lies"—it's almost like an episode of House. When, and if, we get more information on the sale or lack thereof of D&M Holdings, Stereophile will publish it.