Vendor View If You Build It
How D&M played the acquisition game to build a company
By David Dritsas
For D&M Holdings, the past two years have been a busy time. About a year ago, the company was formed by the Japanese manufacturers Denon and Marantz, out of which comes the D&M moniker. The move helped to secure the financial positions of both companies, but the bar for the overall "vision" was set much higher, as D&M made further acquisitions a top priority in its business strategy. Today, in addition to Denon and Marantz, the company owns McIntosh, ReplayTV, Rio and Escient. Now, with its diversity of brands, it aims to play a bigger role as a consumer electronics vendor.
The timing for acquisitions couldn't have been better. It started with McIntosh. The long-time audio manufacturer was picked up by D&M in March 2003, giving the company a high-end name that had valuable brand recognition and a loyal following. But more significant was the fall of digital "convergence" player SONICblue into Chapter 11. Making a play for the failing company's brand names of Rio, Replay and Escient, D&M offered $40 million (minus up to $5 million for assumed liabilities). But the deal broke, and SONICblue took its chances at auction. In the end, D&M bought the three divisions for $36.2 million. The copyright lawsuits that had been previously filed against SONICblue's ReplayTV brand of personal video recorders (PVRs)—which offered a technology that distributed video content over the Internet—were not acquired, as they were lodged against SONICblue. To be safe and avoid further controversy, D&M has eliminated the feature on the new versions of ReplayTV.
In order to maintain consistency among its business partners, D&M has left the engineering, sales and marketing divisions within the three respective companies of Denon, Marantz and McIntosh intact. The others have been grouped into a company known as Digital Networks North America (DNNA) which has its own R&D, sales force and marketers.