AMSTERDAM, THE NETHERLANDS -Philips will cede control of the Marantz brand while retaining a minority stake in the business to send "a clear message to the market" that Marantz "solely is in charge of its strategic direction," the companies said in a joint statement.
Marantz Japan and majority shareholder Philips will restructure their relationship sometime around May, said Philips spokesman Cor Vreven. At that time, Philips will:
Reduce its ownership stake in Marantz Japan from 50.5 percent to 49 percent.
Sell worldwide rights to the Marantz name to Marantz Japan.
And sell to Marantz Japan the sales and marketing companies that market Marantz products in the United States and Europe. Those organizations, including Marantz America, are 100-percent owned by Philips. Marantz Japan already owns distribution rights in Asia, including Japan.
The transaction cost will be in the "tens of millions of dollars," said Vreven.
The joint statement said the change "will open up new opportunities with the [Marantz] brand and its business, one of which will be investing in the brand name itself." Both companies, the statement continued, "believe it is important to have single ownership of the global Marantz business in order to improve its value chain."
Marantz Japan CEO Kazuya Suetake said the change "provides Marantz with the freedom it needs to fully pursue its own interests." And Tom Veerbeek, CEO of Philips Specialty Products, said "we will maintain relationships in many areas, but in this way, we believe Marantz can create more value for its brand."
The change will give Marantz Japan greater control over investments in engineering and production, potentially accelerating time to market, said Marantz America executive VP John McCready.
McCready said Philips' ownership "never impeded Marantz America from going in our own direction" in marketing mid- to high-end audio and video almost exclusively to A/V specialty dealers. "We were not part of the Philips consumer electronics group in Atlanta. We were run as an independent organization."
He acknowledged, however, that "from time to time, we would get comments from dealers about their fears that eventually Philips would take Marantz broader." The planned change, said McCready, "signals a renewed commitment" to specialty dealers.
Marantz Japan, which operates its own factories, will continue to source some products from Philips, including CD-recorder mechanisms and projection TVs, he said.
Philips spokesman Vreven said the changes "fit into Philips' strategy of focusing on high-volume [retailers]." McCready agreed and said, "Certainly, we do not fit the same model from a distribution standpoint, and I think there was a recognition of that fact."
Philips' relationship with Marantz goes back to 1980, when Superscope sold its stake in Marantz Japan to Philips, which also acquired rights outside North America to market Marantz products. Superscope retained North American marketing rights.
In the late 1980s, Cobra bought Superscope and moved the brand into new directions in the United States. In 1991, Philips acquired North American rights to the Marantz name, consolidating its use worldwide.
Marantz was founded in the late 1940s by Saul Marantz, who sold the company to Superscope in 1964.