WHOA Directed buys polk audio for 136M in CASH

[newtitan]

http://www.twice.com/article/CA6364717.html


Directed Cuts Deal To Buy Polk Audio


By Joseph Palenchar -- TWICE, 8/22/2006 11:34:00 AM
Vista, Calif. -- Directed Electronics has reached a definitive agreement to acquire Polk Audio, marking its second speaker-brand acquisition in as many years and making it the top home-speaker brand in dollar volume at retail, the company said.

The deal marks a continuation of a recent spate of speaker company acquisitions. Last week, speaker supplier Klipsch announced that it completed the acquisition of Canadian home-speaker maker Audio Products International. And late last year, D&M Holdings, owner of such component-audio electronics brands as Denon and Marantz, acquired speaker maker Boston Acoustics.

The Polk acquisition, priced at about $136 million in cash, is scheduled to close during the third quarter. Polk Audio enjoys No. 3 home speaker dollar share at retail in the United States after Klipsch and Bose, said Directed president Jim Minarik. Combined sales of Polk and Definitive Technology, purchased two years ago, put Directed in the lead, he claimed.

Because Polk is profitable and successful, Directed won’t fix what isn’t broken, Minarik said. Directed will keep top Polk management to continue running the home and car speaker company out of Polk’s Baltimore offices. Polk co-founders and co-owners Matt Polk and George Klopfer, who were Polk advisers and board members but were not involved in day-to-day operations for several years, will remain on as advisers.

Definitive Technology today operates as independently as Polk will, Minarik said.

The latest acquisition is part of Directed’s strategy to be “the top player” in its markets, not to save a struggling company through consolidation, Minarik continued. Directed’s brand enjoys top share in the car security/remote convenience market and top position in retail-level satellite radio sale, thanks to its distribution agreement with Sirius Satellite Radio, he said.

Polk brings with it retail accounts such as Circuit City, Tweeter, and Fry’s and custom-channel distribution through national distributor alliance AVAD. Polk’s net sales for the 12 months ending June 30 were about $86 million. Directed’s sales, if Polk’s volume were included, would have been about $435 million for the same period.

The Definitive and Polk brands, Minarik added, are “beautifully positioned” to take advantage of the growing trends by retailers to “go back to basics” in demonstrating component audio systems for use with new high-definition display technologies. The component-speaker market has resumed growth, he added.

The recent spate of speaker-company acquisitions is less a reflection of dire times in component audio and more a reflection of founders wanting to tap into the wealth they built up in companies that they founded as long ago as the 1970s, Minarik said. Cases in point include API founder Howard Heiber and Polk’s founders. Likewise, Boston Acoustics was founded in the late 70s. Sandy Gross and Don Givogue founded Definitive in 1990.

In a quirk of fate, the acquisition brings Definitive founder Gross back in close contact with Polk management. Gross was a founding partner of Polk and top Polk marketing executive until about 1990. Gross, Matt Polk, Klopfer, Polk president Jim Herd, and Givogue will sit on Directed’s home audio advisory board, which Minarik is setting up to tap their combined expertise.

In another quirk, Polk’s acquisition will bring XM Satellite Radio into Directed’s product mix. Polk markets a component XM tuner and an XM-ready one-piece set-top audio/video system.

With the acquisition, Polk car audio speakers will join Directed’s other car audio brands. They include Orion, Precision Power, and a/d/s, all acquisitions. Other Directed car audio brands are Extreme, West Coast Custom, and Directed. The a/d/s home-speaker brand is inactive.

[DIYMA]

[Lightninghoof]

Maybe now they'll make some decent car audio speakers. Polk's entry and mid level component sets were some of the worst I have ever auditioned, when I had the chance to install them and listen to them a few years ago.

[luvdeftonz]

Within the next 5 years, Directed will have purchased every single audio company on the planet.

I remember a few years ago when the founder of Directed ran for Governor (or was it Senator???) of my home state of CA. Dude has more money than God.

[Thoraudio]

you wanna know what's scary?

Polk = $136 million

Rockford's market cap = ~$30 million.

[Vestax]

Polk Signature Reference wasn't that bad for cost price of less than $400 but at $900, I don't think it would compete against anything out there in that price range.

[contempter]

back in the mid 90's the midbass and sub duty in my camry was all polk db. At that time the db drivers were some of only a few large excursion drivers on the market that actually had good sq. Bulletproof construction too....its a shame that the brand's quality tanked soon after, and an association with directed will probably do nothing to improve polk's speakers. At least polk wasnt bought out by an anaba company

[STI<>GTO]

Originally Posted by contempter

At least polk wasnt bought out by an anaba company

True.... Directed has become a conglomerate of heavily promoted, mediocre brands, that stay afloat without innovative or exciting products. Business is business, but it's a shame to see formerly promising companies, with highly regarded products (i.e. PPI, Orion, a/d/s) get snatched up and then destroyed. If you can't beat 'em - buy 'em!

Rick

[ArcL100]

Lol carrying around a hundred-mil in c-notes in briefcases like gangsta's like they're the mafia of car audio, muslcing people into their stranglehold.

-aaron

[septimus]

Sad news to hear. I actually like polk, but I think they've been a little stagnant for the past 5+ years. I'm pleased with my sig refs, but maybe thats cus I only payed $187 during a christmas employee pricing promotion

I'm sure they'll just turn the crank so the money comes out, not doing anything to improve or innovate.

[Andy Jones]

Originally Posted by STI<>GTO

but it's a shame to see formerly promising companies, with highly regarded products (i.e. PPI, Orion, a/d/s) get snatched up and then destroyed. If you can't beat 'em - buy 'em!

Rick

When DEI bought those brands they were already in the $hitter. I doubt PPI or Orion would even be around if DEI had not bought them out.

[badlieu]

You guys can rag all you want on Orion but my post DEI Orion H2 12D sub destroys my pre DEI Orion HCCA 12D in design, impact and sound quality (although it doesn't have too too much of that). That's my story and I'm sticking to it. Amps may be a different story (never used any Orion amps) but today I was tempted by a pre DEI Orion HCCA 2100 I saw for $395.

[Exalted512]

Ive always like Polk. I have the SRs in my g/f's car and I would easily put them on par in anything in their price range. I dont see anything good coming from this though...poor polk. I hope their customer service doesnt go down the shitter. They have the best customer service for anyone their size.
-Cody

[MarkZ]

Originally Posted by contempter

back in the mid 90's the midbass and sub duty in my camry was all polk db. At that time the db drivers were some of only a few large excursion drivers on the market that actually had good sq. Bulletproof construction too....its a shame that the brand's quality tanked soon after, and an association with directed will probably do nothing to improve polk's speakers. At least polk wasnt bought out by an anaba company

And their predecessors, the MM series (mobile monitor, not momo), weren't too shabby either.

[MarkZ]

Originally Posted by Andy Jones

When DEI bought those brands they were already in the $hitter. I doubt PPI or Orion would even be around if DEI had not bought them out.

a/d/s/ was also ready to croak. Their customer service at the time was among the worst in the business. Directed's customer service is top notch, and I haven't seen any changes in the quality of the product -- although I'm a little disappointed that they discontinued a/d/s/ amps. Although, IMO, in comparison to the Orion and Directed/Viper counterparts, they were somewhat redundant.

[septimus]

I wish these large companies would leave room for a pet company, bringing out great quality gear that operate at slim margin just to "keep it real" Let them be self sufficient with some passionate people running the show. Why not bring back the A/D/S name with some amps with great SQ, flexible features, tidy design, and moderate price?

US amps, PPI, A/D/S, XTANT, Kove, Orion, Hifonics, Adcom, Soundstream.

Rest in peace.

[ArcL100]

So Xtant is directed then? I called them up one time for some jumpers to bypass the xover chips in my 404M, and they sent them out no charge, no questions, no hassle. It was ridiculous!!!

-aaron

[w00tah]

Originally Posted by ArcL100

So Xtant is directed then? I called them up one time for some jumpers to bypass the xover chips in my 404M, and they sent them out no charge, no questions, no hassle. It was ridiculous!!!

-aaron

Xtant = Mitek

Mitek = MTX, Streetwires, Xtant, and Coustic, IIRC

[STI<>GTO]

Originally Posted by Andy Jones

When DEI bought those brands they were already in the $hitter. I doubt PPI or Orion would even be around if DEI had not bought them out.

I guess that wasn't very clear... The key word was formerly. When Directed bought them, most enthusiasts still had some hope for them. And when I said destroy, I was referring to their name and market. It goes without saying that people that were paying big bucks for Art Series and the first Powerclass amps, are pobably not spending their loot on todays PPI products.

[FoxPro5]

Yet another reason to hate DEI even more. What is the world coming to? DEI home appliances? DEI home style chicken chili with beans? DEI Field, home of the Greedy?

[contempter]

Originally Posted by B-Squad

DEI home style chicken chili with beans?

classic

[septimus]

Originally Posted by ArcL100

So Xtant is directed then? I called them up one time for some jumpers to bypass the xover chips in my 404M, and they sent them out no charge, no questions, no hassle. It was ridiculous!!!

-aaron

Yeah, they've been really nice to me too. Sent me some XO modules for free, and then I spent about 20 minutes on the phone with some Xtant tech guy, who explained in great detail how to make my own. They couldn't have been nicer, I was stunned. Working in retail, I know this kind of customer service is rare to say the least.

[zfactor]

directed appears to be making everything nowadays.. soon they will be into appliances and everything else you can imagine.. i persoanlly think directed sucks ass as a company.. i dropped their python line after they started buying out everyone and started pressuring me to pick up orion or ppi... their rep gave me hell for months finally i said screw you and have been happy since. i personally hate super large companies like this that think their sh$t dont stink.. and they get so large they end up not caring about loosing a few customers / accounts again just mo but i will not go there again...

[MarkZ]

Originally Posted by zfactor

directed appears to be making everything nowadays.. soon they will be into appliances and everything else you can imagine.. i persoanlly think directed sucks ass as a company.. i dropped their python line after they started buying out everyone and started pressuring me to pick up orion or ppi... their rep gave me hell for months finally i said screw you and have been happy since. i personally hate super large companies like this that think their sh$t dont stink.. and they get so large they end up not caring about loosing a few customers / accounts again just mo but i will not go there again...

You should report the rep for being an a-hole. Don't blame the whole company for it.

[DS-21]

Originally Posted by luvdeftonz

Within the next 5 years, Directed will have purchased every single audio company on the planet.

I remember a few years ago when the founder of Directed ran for Governor (or was it Senator???) of my home state of CA. Dude has more money than God.

Darrell Issa was the person who bankrolled the abrogation of democracy that was the CA governor recall referendum, though he was pushed aside by the Austrian. Issa currently stinks up our nation's Congress with his bigotry and stupidity. He's also a convicted car thief. He's riding high now, perhaps, but soon enough he'll rot in hell.

[cvjoint]

I love their (polk momo) amps for tweet/mid applications. therefore I bought five, well 7 if you count the monoblocks I sold. There is something special about these amps and not a lot of people have it figured out yet. I'd love to see my 2500 watt orion sounding as good as a polk momo monoblock but I guess it can only go the other way, polk monoblocks will have as much sq as an orion. Now all my 6 amps are directed