McIntosh Herded Into Denon, Marantz Stable

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Tokyo - D&M Holdings, owner of Denon and Marantz, signed an agreement to acquire McIntosh Laboratory from Clarion Corp. of America and expects to close the purchase in a matter of weeks.

Financial terms were not disclosed.

McIntosh president Charlie Randall said new ownership will increase the profitability of a company that was already posting net and operating profits on $25 million in worldwide sales of high-end home and car audio. Additional profitability, he said, would accrue through the integration of North American back-end operations with Denon and Marantz. Similarly, McIntosh will also gain manufacturing economies by sourcing core home-AV technologies, such as DVD mechanisms, from D&M's Japan factory.

McIntosh also will be able to bring new home AV technologies to market faster, Randall said, by leveraging R&D performed by D&M's core-technology group.

Many of these benefits were not available under Clarion ownership because Clarion's R&D and manufacturing were overwhelmingly focused on OEM and aftermarket car audio, Randall pointed out.

New ownership, added D&M chairman Merle Gilmore, gives McIntosh 'an opportunity to take our DVD, plasma, DLP, and home theater technologies and bring them to McIntosh.' He stressed, however, that production of hand-built McIntosh products would continue in the company's Binghamton, N.Y., factory and not be shifted to D&M's Japan factory.

Likewise, McIntosh's engineering, sales and marketing departments will not be merged with those of Denon and Marantz, whose engineering, sales, and marketing staffs also operate independently, he said.

D&M bought McIntosh, Gilmore said, because D&M is 'a consolidator in the premium space, and McIntosh fits.' D&M's mission is to buy 'brands that have an opportunity to grow and make money but are sub-scale,' he continued. 'We are creating a collection of brands to create independent companies that have scale.' D&M continues to look for additional companies to buy, he added.

Gilmore also said McIntosh was a logical choice because its market position 'is clearly separate from Denon and Marantz.'

Randall said he did not believe Clarion was actively shopping McIntosh when it was approached by D&M. Nonetheless, Clarion Co. of Japan said it decided to sell McIntosh to refocus on its core autosound, car computing, and car navigation businesses, Japanese press reports said. Clarion has forecast a group net profit of 2 billion yen ($17.11 million) for the year ending in March, compared to the previous year's 7.27 billion-yen net loss, according to Japan press reports.

Clarion bought McIntosh in 1990 as part of an effort to use the McIntosh name in its OEM autosound business, Randall said, and under the terms of the purchase agreement, Clarion will have the right to market McIntosh-branded OEM autosound continue for two years. The McIntosh name currently appears on a standard-equipment system in the Subaru VDC Outback wagon in Japan and the U.S., Randall said, and 'other OEM deals are looming,' Randall said.

For its part, the 53-year-old McIntosh will remain in the car audio aftermarket and will continue to source head units from Clarion, he said. McIntosh makes its own car amps in Binghamton.


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