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Merger, Acquisition News at NAMM 2008

Large trade shows often provide the right backdrop to announce company changes, and Winter NAMM was no exception. Perhaps the most talked about event at NAMM was the proposed merger of the TC Group and Gibson Guitars.

Inside the TC Gibson Deal
TC Group is a holding company of five individual companies comprising Tannoy Group, Lab.Gruppen, TC Electronic Group, TC-Helicon and TC Applied Technologies. Besides the Gibson brand, Gibson Guitar Corp.’s family of offerings also includes Epiphone, Dobro, Maestro, Kramer, Steinberger, Tobias, Echoplex, Electar, Flatiron, Slingerland, Valley Arts, Oberheim, Take Anywhere Technology, Baldwin, Chickering, Hamilton and Wurlitzer.

Representing a diverse portfolio of pro and M.I. brands, the merger could lead to some interesting possibilities. “This merger will revolutionize the music industry for many years to come,” said Gibson Guitar chairman and CEO Henry Juszkiewicz. “The synergy between the two companies will allow us an enormous advantage in the development of new audio technologies and brings together two of the world’s most powerful brands.”

This outlook is shared by TC Group chief executive officer Anders Fauerskov. “This merger will create exciting new opportunities for all employees within TC Group and Gibson, and in particular, fantastic new tools for our markets and customers. This partnership will allow us to expand our leadership position in the marketplace.”

In some ways, the deal is similar to TC’s merger with the TGI Group in 2002, where Tannoy remains a independent brand, with its own manufacturing/development/management team, but benefited by incorporating TC technologies to create advanced DSP-controlled loudspeaker systems under the Tannoy name. Additionally, Gibson should benefit by sharing in the TC Group’s strong distribution channels within Europe, while future Gibson products could make use of TC technologies.

The announcement marks a preliminary agreement between the two companies. Under the terms of the merger, Anders Fauerskov will remain based in Europe, and serve as Chief Operating Officer of the new combined Gibson Guitar Corp. The two companies expect to finalize the deal by the end of February 2008. Terms were not disclosed.

Roland Boosts Stake in Cakewalk
In a much-talked about, but far less-involved deal, Roland announced it was increasing its investment in Cakewalk. The association of the two companies goes back to 1995, when Roland began distributing Cakewalk products in Japan. Five years ago, Roland made a cash investment in Cakewalk to help fund the development and marketing of joint products and began distributing Cakewalk products in many markets outside the U.S.

However, this most recent deal should have few implications to end users, and both companies will remain entirely separate, just as in years past.

“Although Roland now owns a bigger share of Cakewalk, they didn’t acquire the whole company,” explains Cakewalk founder/CEO Greg Hendershott. “Cakewalk is not becoming a ‘division’ of Roland. On the contrary, we remain committed to developing stand-alone software, as well as hardware/software products. Cakewalk knows how to make outstanding software. Roland knows how to make outstanding hardware. Together, we can make a big difference in the world of music and audio creation and production.”

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