Directed Electronics Purchases Polk Audio For $136 Million

Directed Electronics, Inc. announced that it has entered into a definitive agreement to acquire Polk Audio, a leading provider of high performance home and mobile audio equipment for $136 million in cash. Current Polk management will be joining the Directed team after the acquisition which is scheduled to close during the third quarter of 2006.

“The acquisition of Polk, with its leading consumer brand, complements our current Definitive Technology product line. 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,” commented Jim Minarik, President and CEO of Directed. “We look forward to working with the Polk team to expand our home audio business,” he continued.

Founded in 1972, Polk has grown into a leading speaker brand in home entertainment and has managed to become a staple brand in some of the biggest electronics retailers including: Fry’s Electronics, Circuit City, Tweeter and Crutchfield. Polk recently unveiled an all-in-one compact stereo system, dubbed the I-Sonic, into the market, which combines HD Radio, XM Satellite, CD/DVD, and iPod compatibility. Polk’s focus on brand management and product development has resulted in an impressive track record of growth in both home and mobile audio. Polk co-founders Matthew Polk and George Klopfer will remain actively engaged after the transaction by using their 35 years of industry experience to advise on the direction of Directed’s home audio strategy. Including Polk Audio’s approximately $86 million in net sales for the twelve months ended June 30, 2006, Directed’s net sales would have been approximately $435 million for the same period.

“The addition of Polk Audio is significant in that it continues our strategy of building a growing and profitable security and entertainment platform,” commented Kevin Duffy, Senior Vice President of Strategy, Corporate Development and Investor Relations. “We are also excited by Polk’s broad product offering including the company’s growing position in the expanding custom installation speaker market,” he continued.

Goldman, Sachs & Co. and Trivest Partners acted as financial advisors and Greenberg Traurig, LLP acted as legal advisor to Directed Electronics. Barrington Associates acted as the exclusive financial advisor and DLA Piper US LLP acted as legal advisor to Polk Audio. The acquisition will be financed by an addition to Directed’s senior credit facility. CIBC World Markets and J.P. Morgan Securities are providing committed financing for the acquisition and related expenses.

More information on Polk Audio and Directed Electronics

Author: FutureMusic

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