Emerson Radio Corp. and Adcom LLC Announce Joint Venture
We checked for ourselves and, sure enough, Adcom's home page directed us to a press release, announcing that, "Pursuant to the agreement in principle, Emerson would contribute cash to the new company in exchange for a controlling interest in the new company, and ADCOM would sell and/or license certain of its assets, including, all of its intellectual property, to the new company in exchange for cash and a non-controlling interest in the new company. It is contemplated that the new company would be headquartered in Emerson's Parsippany, New Jersey office and operated in Scottsdale, Arizona."
We found this intriguing on several levels. Adcom, of course, is an iconic high-end manufacturer known for developing high-quality, yet reasonably priced, components, such as the GFP-1 preamplifier (this writer's first separate component), the classic GFA-555, and, more recently, the GFP-750 preamplifier. Emerson Radio was founded back in the early days of sound reproduction as Emerson Phonographic Co., changing in 1924 to Emerson Radio and Phonographic Corp. before converting to wartime production of radios for the US Armed Forces. One of the company's first post-war products was a television with a 10" tube. In the early 1950s, the company diversified into air conditioning, which was later spun off as a separate company, while Emerson continued to produce electronics under the Dumont, Pilot, and Emerson badges. In 1973, Emerson sold its marketing license to Major Electronics Corp., a company dedicated to manufacturing affordable radio, phonographs, and clock radios. It changed its name to Emerson Radio Corp. in 1977. During the 1980s, the company diversified, manufacturing everything from refrigerators to fax machines, selling them to big-box stores, including the rapidly expanding Wal-Mart franchise. Since 2001, Funai Electric Co. Ltd, of Osaka, Japan, has manufactured all Emerson-branded electronics sold in Wal-Mart.
So our first question was: What would Emerson do with Adcom?
Emerson and Adcom aren't saying. Through its public relations company, Emerson said, "It would be premature to comment on your questions—since what we've announced is an agreement in principle, and the creation of the contemplated venture has yet to be consummated." However, we did a little research and might have a glimmer of an idea.
First, one has to consider Adcom's recent history: After having been acquired first by California Audio Labs, which was then acquired by Go Video, in 2002, Adcom was sold to the Klein Technology Group, LLC, which consisted of Doug Klein (formerly of Go Video), Matt Lyons (formerly Polk and Lyons engineering), and Dan Donnelly (formerly of CAL and Sensory Science)—in other words, the talent bought the franchise. Klein and Lyons have since moved on, but Donnelly remains.
In addition to its current line of components, Adcom is working on a 25th anniversary model of the GFA-555 and a GFP-750 Mk.II.
We also discovered that Emerson Radio is involved collaboratively with Grande Holdings, which controls the Nakamichi, Sansui, and Akai brands, indicating there is some awareness of the value of classic hi-fi marques. Appreciation may not be enough, however, since Grande has also been accused of destabilizing Akai holdings through a series of complicated cross-selling deals that left many fingers pointing.
Sources close to Emerson and Adcom suggest that the proposed deal is not an acquisition, since the companies achieve near parity—the split is rumored to be 51%–49%. A source close to Adcom speculated that Adcom's design talent was the likely draw. "Asian manufacturers have become extremely good at making high-quality stuff, and making it cheaply. But designing innovative stuff? Not so much. There's a lot of that know-how at Adcom."