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D&M Agrees To Takeover By Bain Capital

6/20/2008 09:20:00 AM Eastern

Tokyo-- D&M Holdings’ board of directors has agreed to a tender offer by Bain Capital to take D&M private for 510 yen ($4.74) per share, or roughly $442.9 million.

RHJ International, D&M’s largest shareholder, also agreed to the takeover. RHJ owns 45.3 million shares, or 48.5 percent of outstanding fully diluted shares.

Once it launches the offer, Bain said it intends to purchase 100 percent of the shares of D&M Holdings. Other shareholders include Philips, which is D&M’s second largest shareholder with about 12 percent of stock. Ten 10 other major shareholders, including Japanese banks, own most of the remaining stock.

Bain will launch the tender offer within 25 days of the D&M board’s June 19 signing of the tender-offer agreement. Within a few months, D&M will be a wholly owned subsidiary of a holding company that Bain will create, said a spokesperson for D&M North America.

Private ownership, the spokesperson said, will enable D&M-owned brands to focus more on cash flow rather than on earnings and thus “manage a little more long term.” In addition, D&M will be able to move more quickly in acquiring companies because it will not be slowed down by stock-exchange paperwork, she added.

No other companies partnered with Bain to make the acquisition, she noted, referring to previous press reports that JVC and Kenwood were joining Bain to make a purchase offer.

D&M Holdings owns brands in the consumer, automotive, commercial and professional audio and video businesses. Brands include Denon, Marantz, McIntosh Laboratory, Boston Acoustics, Snell Acoustics, Escientâ, Calrec Audio, Denon DJ, Allen & Heath, D&M Professional, and D&M Premium Sound Solutions, an OEM provider of mostly car audio systems to automakers.

Bain’s proposed purchase price represents a premium of 37.1 percent over the average closing share price in the six months prior to June 19, D&M said in a statement. It also represents a premium of 68.9 percent over the unaffected closing share price on January 23, the day before press reports emerged with “speculation regarding a potential transaction involving the company,” D&M said.

In the statement, D&M chairman/CEO Eric C. Evans said that “after an exhaustive review of strategic options, we have determined that this offer from Bain Capital represents the best overall value for our shareholders. The next few years should be an exciting time for D&M as we enter another phase in our development.”

“If Bain Capital acquires D&M through the tender offer,” he continued, “we believe we will be better positioned as a privately held company to be more flexible in the fast-paced changing markets in which we compete. We will also have wider latitude to invest for medium- and long-term growth.”

In addition, the statement said, “Going forward, the company intends to continue its active pursuit of acquisitions and growth in the consumer, commercial and automotive audio video businesses.”

The per-share purchase price in price reflects an exchange rate of 107.5 yen to the dollar.

Bain Capital also has ownership interests in more than 300 companies worldwide, including Burger King, Dunkin’ Brands, AMC Theaters, Toys “R” Us, and Warner Music Group.

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