In a strange move U.S consumer electronic retailer Best Buy has joined Harmon Kardon in a battle to buy Japanese audio equipment maker D&M Holdings the maker of brands such as Marantz, Denon, Boston Acoustics, Snell and Escient. Philips has also said that they will sell down their 12% shareholding in the Japanese Company.
According to reports out of Japan Best Buy apparently hopes to improve its competitiveness by bringing D&M into the Best Buy stable however several retailers claim that the move is fraught with risks as retail competitors to Best Buy could drop the D&M brands from their portfolio of products.
According to US trade magazine TWICE, RHJ International SA/NV, which holds 49 pct of D&M, conducted a tender for D&M shares in late March and reduced buyer candidates to four–Best Buy, fund Bain Capital LLC, Japanese fund Advantage Partners LLP and U.S. brokerage house Merrill Lynch & Co.
The four candidates will examine and evaluate the assets of D&M more closely and submit detailed business programs to RHJ. RHJ, formerly called Ripplewood, will conduct a second tender as early as May to finalize the buyer for D&M.
D&M’s main shareholders are U.S. buyout firm Ripplewood Holdings LLC and Dutch electronics maker Koninklijke (Royal) Philips Electronics NV, according to Reuters. RHJ International SA, a holding company owned by Ripplewood, is auctioning its roughly 49 percent in D&M, which has a market value of $277 million, Reuters said.
The winner of the auction is expected to bid for the whole company, and Philips is expected to sell its 12 percent stake in D&M at that time, Reuters reported. A spokeswoman for D&M declined to comment, according to the article.
For the year that closed in March, D&M is seen reporting record earnings, with consolidated sales estimated at 108.5 billion yen and operating profit at 6.4 billion yen.
If the buyer acquires all the outstanding shares in D&M, the cost is expected to exceed 50 billion YEN.
Best Buy operates some 1,200 stores in the United States. Its sales network also covers Canada and China. The U.S. retailer, which has annual sales of 35.9 billion dollars, is the largest client of D&M.
The world’s largest audio equipment maker, Harman International Industries Inc. of the United States, known for its JBL speakers, was outbid in the first tender.