D&M Holdings to Acquire Boston Acoustics

More consolidation in the audio biz: D&M Holdings, owner of Denon, Marantz, McIntosh Laboratory, ReplayTV, Rio, and Escient, took another big gulp last week and made a move to acquire Boston Acoustics.

Boston Acoustics was founded in 1979 (interestingly enough, not in Boston, but in Peabody, Massachusetts), and quickly found success in the home loudspeaker market, creating such classic bookshelf designs as the A70 and the diminutive A40. In the late 1980s, the company expanded into the car-audio and custom-installation markets and then on to OEM design and manufacturing. In recent years, after a long courtship, BA also acquired loudspeaker manufacturer Snell Acoustics.

D&M Holdings says it will make the purchase through its domestic subsidiary, D&M Holdings US. The company will acquire Boston Acoustics for $17.50 per share in cash for a total of approximately $76 million. BA's stock hit its one-year high closing price of $16.25 on Tuesday last week.

The companies report that the acquisition has been approved by the Board of Directors of Boston Acoustics, and is subject to the approval of the company's shareholders and the satisfaction of other customary closing conditions, including the receipt of required financing. Boston Acoustics founder Andy Kotsatos, his wife, and the Kotsatos family trusts and Daeg Partners LP have each agreed to vote their shares, representing approximately 33.2% and 4.8% of the voting stock of Boston Acoustics, respectively, in favor of the transaction. The transaction is expected to close by August 31, 2005.

D&M says the acquisition adds "a premium speaker line and the ability to deliver to customers a complete home entertainment solution." Through its various brands, the company distributes AV receivers, amplifiers, CD/DVD players, DLP projectors, plasma monitors, and digital media management systems. D&M claims that the new deal also provides "a strong foothold in the automotive OEM business along with the ability to leverage all five premium brands—Denon, Marantz, McIntosh, Boston Acoustics, and Snell—in that business."

D&M adds that it is planning to operate Boston Acoustics as a distinct brand "but with the benefit of D&M's sales, technology, and cost synergies by leveraging product distribution channels, product development, and back-office integration."

According to BA's Kotsatos, D&M "will be able to help us grow our brand outside North America. And they will provide us with marketing know-how to substantially increase our table radio and music system business."