Matthew Polk gets (another) big bag of loot

http://www.marketnews.ca/news_detail.asp?nid=2073

Following on last week’s announcement of Klipsch’s acquisition of API, today we learned that Directed Electronics has purchased Polk Audio for approximately US$136 million.

"The acquisition of Polk, with its leading consumer brand, complements our current Definitive Technology product line,” commented Jim Minarik, President and CEO of Directed. “Having these two powerful brands under the Directed umbrella will give us the number-one position in the U.S. home speaker market according to industry data. We look forward to working with the Polk team to expand our home audio business.”

Directed Electronics offers vehicle security and convenience systems under the Viper, Clifford, and Python brand names; home audio speakers under the Definitive Technology and a/d/s names; and mobile audio products under the Orion, Precision Power, Directed Audio, a/d/s, and Xtreme brand names.

This acquisition continues the trend of consolidation we’ve seen over the past couple of years of larger, distribution-focused CE companies (often wholly owned by Private Equity partnerships) acquiring established, profitable, mainly privately held brands. In 2005, D&M Holdings purchased Boston Acoustics. D&M is the arm of Ripplewood Holdings LLC that owns electronics manufacturers Denon, Marantz, Escient and McIntosh. Also last year, International Audio Group purchased British speaker brand Mission, and Shoreview Capital Partners acquired Paradigm Electronics Inc.

So, the question for industry watchers and market players is “who’s next?” If you have a well-capitalized loudspeaker company with strong brand image and depth in your dealer network, you might want to polish your p&l statements, because with all the private equity cash sloshing around the industry you may find your company on someone’s wish list (I’m talking to you, Vince Bruzzese of Totem Acoustic).

Bonus Feature: For those who like such things, this link leads to a pdf of Ripplewood’s May 17 2006 presentation on their brand strategy:

http://www.dm-holdings.com/eng/ir/presentations/2005/document/20060517_en.pdf#search=%22Ripplewood%20Holdings%20LLC%20mcintosh%22

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