Denon up for Sale - Best Buy and Kenwood Bidding

This has been a month of topsy turvy business decisions. Earlier this week we heard that Blockbuster is considering the purchase of ailing Circuit City. Before that, Apple leapfrogged both Amazon.com and Wal-Mart to become the #1 music retailer. But now, a recent flurry of domestic and Japanese market activity has all that topped.

Denon is for sale for around $700 million.

Well, D&M Holdings to be exact - and that means Denon, Marantz, Snell, McIntosh, Boston Acoustics, Escient and more... It's not just "maybe" up for sale - 49% of the shares are being offered up for sale by their owner, RJH International. But wait - 49% doesn't make a majority. It does when Phillips Electronics, who owns another 12%, says that it will also offer to put its stock up for sale to the winning bidder as well.

D&M Holdings' stock has sored in the recent wave of bids from the likes of Harman International (maker of the JBL, Infinity and Harman Kardon brands), Bain Capital (who owns Kenwood)...

Wait a second, did we just say Kenwood?

The implications of this sale are pretty staggering. If Bain Capital wins, Kenwood, long out of the home AV market, would have access to some of the most cutting edge technology on the market today. Can you imagine Denon receiver being controlled by Kenwood? Who knows, they might just put their AV market out of business and move them into car audio... nah.

Continuing on the list we have Japanese fund Advantage Partners LLP, U.S. brokerage house Merrill Lynch & Co., and consumer electronics giant Best Buy Co.

If Best Buy wins, you can almost hear the moaning from the audio elite crowd as they realize that they may have to start recommending Denon products which are only sold through the big box chain stores. We very much doubt the store would re-brand any of the D&M companies under the Best Buy or Insignia logos, however it could change the way Denon and McIntosh may be perceived by the high-end audio community.

As Best Buy is D&M's biggest customer, it makes good financial sense for the consumer electronics retailer. The implications for the types of equipment that will be offered in their Magnolia shops would increase in number as well as quality. McIntosh has a near fanatical following, though being able to roll down to your local Best Buy to check out the latest tube amps is probably going to be met with mixed emotions.

If Harman International had stayed in the bidding (they dropped out last week), the consolidation of two of the biggest manufacturers of consumer electronics (or at least as relates to home theater electronics) would have created a near monopoly. Yamaha, Pioneer, and others would have been dwarfed in comparison. With the fate of so many of the top brands of audio gear on the line, it's no wonder that the AV crowd is watching this one closely.

Those interested in foreign markets and such will note that shares in D&M (natively quoted in Yen, but converted here for perspective) dropped from ~$5.46 to ~$2.50 between November 2007 and February 2008. With the recent interest and buyout talks, it has since rallied to ~$3.91.