Then, in a “corrected” story appearing the next day, under the title “CORRECTED – UPDATE 3-Bain Capital wins race for Ripplewood audio maker,” Reuters re-ran this story and added, in part:

Bain had been competing with Japanese private equity fund Advantage Partners and other companies to buy D&M. Japanse [sic] audio maker Kenwood Corp (6765.T: Quote, Profile, Research) has meanwhile said it was interested in an alliance with its rival. [ID:nT316956]
Kenwood spokesman Takaaki Nose said the company was still interested in a business alliance with D&M but that nothing has been decided. Nose added Kenwood was not in talks with Bain regarding the buyout.

Bloomberg also reported on a Kenwood connection:

Kenwood Says It's Interested in Allying With Bain Capital's D&M
By Finbarr Flynn

June 21 (Bloomberg) -- Kenwood Corp., a Japanese maker of car-navigation systems, said it's interested in an alliance with D&M Holdings Inc., the audio-equipment maker that yesterday agreed to be bought by Bain Capital Partners LLC.

[This story goes on to note that, “No decision has been made to invest in D&M, the Tokyo-based company's spokesman Takaaki Nose said by telephone today.”]

Several stories linking Kenwood with D&M Holdings have come from the Nikkei in Japan. As recently as Monday, June 23rd, the Nikkei said in an analysis:

ANALYSIS: Kenwood To Take Audio Equipment Firm D&M
TOKYO (Nikkei)--Kenwood Corp. (6765), which will soon integrate management with Victor Co. of Japan (6792; JVC), intends to lead a reorganization of Japan's audio-visual industry by taking a major stake in D&M Holdings Inc. (6735), which holds the Denon and Marantz audio-equipment brands. Enhancing its car-audio operation is driving the move, made possible by the funds, connections and tenacity of Chairman Haruo Kawahara.

The story goes on to add:

On May 12, when Kenwood officially signed the agreement to integrate with JVC, Kawahara said, "It would be wonderful to have another in our alliance as a major addition to our strength." He was apparently more interested in bringing in this third party than rejoicing about the alliance with JVC, which he felt was "not a strong enough measure to ensure survival in our industry."

For Kawahara, Kenwood's integration with JVC was just the beginning.

In the face of all of the stories linking Kenwood to some type of arrangement with D&M, Bain finds themselves in a difficult position…here they are about to launch a tender offer to purchase shares of D&M, and these press stories may have an unwanted impact on this process.

Seeking to put these stories of Kenwood involvement to rest, representatives of Kenwood, Bain, and D&M began putting out “corrective” information.

Just today, Kenwood’s Public & Investor Relations Office sent this statement to the ALERT:

Notice regarding the news reports on June 21st and June 23rd It has been reported in the media on June 21st and June 23rd in japan [sic] that Kenwood Corporation has decided to seek a business and capital alliance with D&M Holdings Inc. (of at most one billion yen), however, as stated in the June 21st press release, nothing has been decided at present.
There is no fact that Kenwood has decided its plan to formulate a business and capital alliance as described in certain news reports.

Shortly after receiving the Kenwood statement, the ALERT obtained a copy of a Bain statement released late yesterday:

Bain Capital Statement Regarding Exclusive Offer for D&M Holdings

TOKYO, Japan – June 24, 2008 – In response to speculation regarding the anticipated tender offer for D&M Holdings, Bain Capital would like to clarify that Kenwood is not an investor in the proposed transaction, and there are no discussions or plans regarding a future alliance with D&M at this time.

So what’s going on here? Is Kenwood involved? If not, why would the press say that they are? Unfortunately, the participants to the deal have all become very tight-lipped about the situation other than to refer the press to the carefully prepared statements.

There are most likely several contributing factors to these stories or leaks getting ahead of official company communications. First, the world is moving fast and with a twenty-four hour news cycles, news organizations are competing aggressively to be the first to get stories out.

Second, virtually all news organizations rely on unnamed sources to obtain stories that might be sensitive. Most legitimate organizations will not run stories unless they have some form of confirmation…usually with an alternate corroborating source. But not all organizations are as scrupulous as others.

We won’t know for sure what’s happening until the companies involved make official announcements or provide some other form of confirmation. This is unlikely to happen before the completion of the tender offer by Bain.

However, it doesn’t take a rocket scientist to notice the qualifying comments in each of the prepared statements. Kenwood’s statement says, for example, that the press has reported its involvement with Bain and D&M effectively as a done deal…but, says Kenwood “nothing has been decided at present.” The statement goes on to say that “There is no fact that Kenwood has decided its plan…” Rather than categorically denying that a deal is in the works, they simply say they haven’t decided yet.

Bain’s statement says “there are no discussions or plans regarding a future alliance with D&M at this time.” [Emphasis added] Of course, tomorrow is a new day…and a new time.

A Tokyo-based Bloomberg reporter, in an email exchange with the ALERT, said he had spoken directly with Kenwood executives and that they were clearly “interested in a tie-up” with D&M. He added, “interested” is the quotable word here.

It is unlikely that the press got it all wrong. There is far too much detail in the reporting over the last several weeks, such as:

• THE PROPOSED CATEGORY – CAR ELECTRONICS
One of Kenwood’s most important product categories is car audio…and this appears to be an area of joint opportunity as D&M is well positioned in the category with strong brands, strong technology, and strong relationships with certain U.S. auto manufacturers.

• THE TIMING OF INVESTMENT
Press reports say that the investment will take place in September.

• THE AMOUNT OF INVESTMENT
The amount reported from multiple sources is ¥1,000,000,000

There appears to be too many specifics for the reporting to be simply the result of a mistake. It is also highly unlikely that there is some type of massive conspiracy by the press to misinform the public. Yet without confirmation from the companies involved, one is left to conjecture that there might be more to this story. Some might say where there’s smoke, there’s fire.

Potentially adding fuel to that fire, the Nikkei story points out an interesting connection between Kenwood, Ripplewood and Bain. Yuji Sugimoto, the founding director of Ripplewood’s Japan office, is now a managing director at Bain. When Ripplewood first took over Columbia from Hitachi back in 2001, Sugimoto needed to plan a major reorganization of the Columbia business. In order to do so, he sought the advice of a former managing director of Columbia who was then an advisor of Toshiba Corp.

And who was that advisor? That advisor was the current chairman of Kenwood, Haruo Kawahara.

And finally, yet another clue as to how this situation may have developed is revealed in a comment made by a Bain spokesperson to the ALERT. When pressed as to whether the companies (Kenwood, Bain and D&M) had ever discussed the possibility of working together, the Bain spokesperson allowed, that there “may have been earlier discussions with Kenwood.”

But the spokesperson assures the ALERT that those discussions are over. The unanswered question is, are they really over for good…or just over for now?