APRIL 2008 W3 SPECIAL ALERT
Sale of D&M Sparks Feeding Frenzy
Kenwood Joins The Fray in Bid to Buy D&M
In yet another twist to the D&M tale, the Nikkei reported today that Kenwood Corp. has joined in the auction frenzy by partnering with Bain Capital, LLC in a bid to purchase D&M Holdings, Inc. from current owner RHJ International SA/NV. Just like the report of a JCN Network story that appeared in a special ALERT this morning, the Nikkei indicates that the final round of bidding will take place in mid-May.
In multiple stories from multiple sources, here are some of the common elements relating to the current status of the RHJI auction. There are four participants in this second and final round of the auction process. JCN identifies the four parties as Bain Capital LLC, Advantage Partners LLP, Merrill Lynch & Co., and Best Buy.
The Nikkei likewise identifies the remaining four parties as Merrill Lynch & Co., Best Buy Co., Advantage Partners LLP, and Bain Capital LLC…with the added twist of identifying the Bain effort as actually an alliance with Kenwood Corp. The story also suggests that there were as many as ten participating companies in the first round of the auction…but it does not identify them.
Both JCN and the Nikkei place the value of the deal at approximately 50 billion yen or just under $500 million…which is said to be “well above its market capitalization.” Market capitalization is reported to be more than 31 billion yen or approximately $300 million.
All four rivals have begun serious due diligence and all are expected to purchase RHJI’s entire 49% stake of D&M. Other sources have also suggested that Philips, which owns another 12% of the D&M stock, also intends to divest its holdings, perhaps to the winning bidder.
Interestingly, Kenwood itself is in the process of completing its business tie-up with JVC announced in July of last year. Kenwood, in partnership with Sparx Group Co., an asset management firm that is Kenwood’s largest shareholder, took financial positions in JVC thereby unburdening Matsushita Electric Industrial Co. of the money losing division. Kenwood was said to have purchased a 17% stake in JVC, while Sparx purchased 12.8% of JVC’s stock. This reduced Matsushita’s ownership from 52.4% to 36.8% and changed its relationship from that of a subsidiary to one of a financial investment.
Kenwoods purchase of JVC is expected to be completed by this fall. At this time, it is unclear what the impact of the successful acquisition of D&M would have on the Kenwood/JVC situation. According to the Nikkei story, a successful purchase of D&M by Kenwood would “bolster the business base of the Kenwood-JVC entity.”