Three's a Company

Corporate consolidation has been likened to gravity: an inexorable, hard-to-resist force of nature always lurking in the background. D&M Holdings, parent company of Denon and Marantz Japan, has clearly felt its effects, announcing last week its latest acquisition: McIntosh Laboratory.

D&M Holdings itself is the result of a merger that took place almost exactly one year ago when Marantz Japan and Denon combined operations. The seeds for that deal were sown a year earlier, in 2001, when Marantz Japan acquired the Marantz brand from Philips and established operations in Europe and the US. D&M has purchased McIntosh from car audio specialty company Clarion Corporation of America, which had acquired McIntosh in 1990.

Although financial terms of the latest D&M acquisition were not disclosed, McIntosh reports it has annual revenue of approximately $25 million. D&M Holdings reports that financial effects from the deal are not expected to be significant in its current fiscal year (2002), which ends in a couple of weeks on March 31, but instead will affect the company in fiscal 2003.

D&M Holdings' Tatsuo Kabumoto says his company hopes to gain added exposure to audiophiles with the purchase, remarking, "McIntosh brings to D&M an exclusive worldwide dealer network that will yield synergies with our current distribution channels."

According to D&M, the McIntosh brand, along with its sales and marketing operations, will be maintained as a stand-alone operation, following the same strategy employed by the company with Denon and Marantz. And D&M's accretion of audio brands may continue. The company notes that this deal is "consistent with the company's strategy to consolidate the premium audio/video industry through acquisitions."

All three of D&M's companies have deep roots in the audio business, having existed for a combined 169 years. Denon was originally established as a brand in 1938 when Nihon Denki Onkyo was formed. In 1963, Nihon Denki Onkyo and its Denon brand merged with Nippon Columbia, which has a history going back to 1910 as the Japan Gramophone Company. Denon was eventually spun off as an independent entity in 2001.

Marantz was founded by Saul Marantz in New York City in 1953 and was eventually sold to US-based Superscope Technologies in 1964. Then in 1971, a financial transaction with Standard Radio of Japan led to Marantz' main design and production facilities moving to Japan, and in 1975 Standard Radio re-named itself Marantz Japan. In 1980 Royal Philips Electronics of the Netherlands bought Marantz Japan stock from Superscope.

McIntosh, founded by Frank McIntosh, Gordon Gow and Maurice Painchaud, debuted its first product in 1949. In 1951 the company moved from Washington DC to Binghamton, NY and at the same time MIT engineer Sidney Corderman joined McIntosh as chief engineer. Frank McIntosh retired in the late 1970s, leaving Gow, Painchaud, and Corderman in the leadership positions until the company was acquired by Clarion of America, a subsidiary of Tokyo-based Clarion Company, in 1990.

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