Klispch Acquires Audio Products International

[ericl]

Klipsch buys Audio Products International, makers of Energy, Athena and Mirage speakers. It says they will remain independently operated entities, which is a good thing, but I wonder if they will have much influence over each other..

INDIANAPOLIS (August 15, 2006) -- Klipsch Group, Inc., parent company of Klipsch Audio Technologies, announced today the acquisition of Audio Products International Corp., (API), one of the largest speaker manufacturers in the world and the makers of the Mirage®, Energy® and Athena® Technologies brands.

"The acquisition of API will assist Klipsch in our commitment to greatly improve business operations on a global level," said Fred Klipsch, chairman, Klipsch Group. "This purchase is another step in our strategic plan of adding unique and successful loudspeaker companies to our portfolio of products."

Klipsch Group is the parent company of Klipsch Audio Technologies, Jamo International and API Brand, with companies remaining independently operated entities. The product design and engineering of the API brands will also remain separate to maintain their respective unique character and personality. Nonetheless, the Klipsch, Jamo and API brand teams will work in a cooperative fashion to develop global technology platforms and product strategies that leverage investments in R&D ensuring the Klipsch group of brands stay on the cutting-edge of product, technology and brand development.

Read the whole release..

[Woochifer]

Interesting. This type of consolidation seems to be the direction that the industry is moving towards. I'm guessing that this has to do with consolidating the supply chains and serving as a "one stop shop" for chain stores. D&M Holdings was originally formed out of the merger between Marantz and Denon, and the company subsequently acquired McIntosh, Escient, and Boston Acoustics. This structure now looks similar to how Harman International is organized. Recently, D&M's group of brands displaced Harman at Circuit City stores.

Sumiko has a similar group distribution relationship with Magnolia/Best Buy, supplying them with products from Pro-ject, Primare, Vienna Acoustics, Sonus Faber, and Sumiko. A combination of Klipsch and API would likely consolidate the relationship that the two companies currently have on an individual basis with Magnolia/Best Buy.

[kexodusc]

Wow, that's a real heavyweight purchase. API is no small fry! This should help each company shed some redundant cost and share in product designs - hope it gets passed on to the consumer.

[Geoffcin]

Wow, that's a real heavyweight purchase. API is no small fry! This should help each company shed some redundant cost and share in product designs - hope it gets passed on to the consumer.

Mergers like this have the usual effect of making a few high level executives very rich, and a lot of mid level managers unemployed. What's left of the savings of scale (after the execs line their pockets) gets passed on to the shareholders.

[kexodusc]

Mergers like this have the usual effect of making a few high level executives very rich, and a lot of mid level managers unemployed. What's left of the savings of scale (after the execs line their pockets) gets passed on to the shareholders.

That's the spirit!

We have a saying in investment management industry: "M&A's aren't all bad, just the really big ones"...I wouldn't expect anything revolutionary from this, but probably more distribution and joint promotion efforts - and likely any cost savings will just keep them competitive these days.

I don't see near as many Klipsch speakers in stores as I used to - not that I'm a fan, but that can't good.

[Woochifer]

That's the spirit!

We have a saying in investment management industry: "M&A's aren't all bad, just the really big ones"...I wouldn't expect anything revolutionary from this, but probably more distribution and joint promotion efforts - and likely any cost savings will just keep them competitive these days.

I think you're right on this. Makes me wonder if the Klipsch/API merger is just the beginning (i.e., are they now looking for a component manufacturer to acquire so that they can compete at the same level with D&M Holdings and Harman International?) and if more of these conglomerates are in the offing. Being part of a conglomerate like D&M Holdings might have been the only way for Denon and Boston Acoustics to displace the Harman International brands that have been part of Circuit City's product line up for over 20 years.

The specialty electronics retail landscape is shrinking and consolidating. Not very many opportunities left to get into national and regional distribution channels. These stores might indeed find efficiencies in their supply chain by dealing with one player that can provide multiple product lines, rather than multiple companies that each supply only one specific product line. Even a higher end chain like Magnolia Audio Video (which is owned by Best Buy, but operates independently) has a large part of its product lineup supplied by one company, Sumiko North America.

I don't see near as many Klipsch speakers in stores as I used to - not that I'm a fan, but that can't good.

Aside from the Synergy series speakers at Best Buy and other big box stores, there's only one retail store in the entire SF Bay Area that currently stocks Klipsch's Reference and Heritage series models. Much of this is due to the demise of the Good Guys chain, which operated primarily in California and served the upper middle market similar to Tweeter and Magnolia Audio Video. Good Guys was also the primary vendor for Energy speakers in California. But, once those stores closed, you can hardly find those speakers anywhere around here. It just goes to show the influence that the retail picture has on local availability.

Retailers in other areas might have dropped Klipsch when they got in bed with Best Buy.

[westcott]

There are two good things that come out of this for Klipsch. First, all the acoustic engineering technology that comes from API and all the mfgs that developed their products in conjunction with the Canandian Research Center's. I am a horn fan but some of my favorite direct radiator speaker designs are made by just such companies like API.

Second, the manufacturing prowess of these companies and their ability to manufacture quality cabinetry\enclosures for drivers.

You do not stay in the speaker business for 60+ years without advancing your audio technology and manufacturing capabilities. All of the acquisitions will operate as separate business entities but will share technology.

[PHiX]

Mergers like this have the usual effect of making a few high level executives very rich, and a lot of mid level managers unemployed. What's left of the savings of scale (after the execs line their pockets) gets passed on to the shareholders.

Exactly, now they share the same infrastructure which allows to cut in overhead costs. It might lead back to the shareholders, but also the consumers since it allows for price cuts.