The chairman of Japanese electronics maker Kenwood Corp said on May 15 his company could take a stake in D&M Holdings Inc, the maker of Denon and Marantz audio equipment. US buyout fund Ripplewood's holding company RHJ International SA is auctioning its roughly 49 percent stake in D&M, sources familiar with the matter have told Reuters.
Kenwood Chairman Haruo Kawahara told Reuters in an interview that taking a stake as part of an alliance with D&M could make sense for his firm.
"Cooperation between some of our businesses could be effective. There may be a case in which we take a small stake in each other or where we take a stake in them (D&M) to strengthen that cooperation," Kawahara said. Kenwood is set to merge with electronics maker Victor Co of Japan Ltd (JVC) on October 1, as they fight fierce price competition and growing costs of product development.
Kawahara is set to lead the new organisation, JVC Kenwood Holdings Inc, as chairman.
Kawahara said management's highest priority now is on the integration of Kenwood and JVC, and it would not buy out the whole of D&M under any circumstances. The new JVC Kenwood will still fall far behind some of its rivals in size. Combined sales of the two companies totalled 823.7 billion yen ($7.8 billion) in the year ended March 31, or less than one-tenth of Panasonic maker Matsushita's 9 trillion yen or Sony Corp's 8.9 trillion yen.
But Kawahara was quick to point out that the new organisation will be among global leaders in its main business fields. "We may not have financial operations and games like Sony or white goods like Matsushita. But when it comes to businesses that we are actually conducting, we are running neck and neck with global leaders," Kawahara said.
JVC Kenwood Holdings is likely to be the world's largest car audio maker and Kenwood is already the world's second-biggest maker of wireless radio equipment such as walkie-talkies, behind Motorola Inc, Kawahara said. JVC and Kenwood aim to bring the new holding company's operating profit to 39 billion yen in the year ending March 2011, up from a pro-forma combined profit of 9.6 billion yen in the business year ended March 31, by cutting costs through joint development and joint procurement of parts and materials. Shares in Kenwood closed up 1.6 percent at 124 yen, compared with the Nikkei average's 0.9 percent gain.