As part of the agreement, SigmaTel will hire most of the technical development personnel of Rio. Rio will retain full access to its MP3 technology that it has agreed to sell to SigmaTel via a no-fee, grant-back license conditioned on its use of the SigmaTel platform in MP3 products. Financial terms were not disclosed.
D&M Holdings owns Denon, Marantz, McIntosh Laboratory and the D&M Professional, ReplayTV, Rio and Escient brands.
SigmaTel’s industry-leading portable digital audio technology can be found within the latest MP3 players made by Rio, Creative, GoVideo, Memorex, Samsung, Thomson RCA and many others. To date, SigmaTel’s focus has been on flash-based players, which is the largest segment of the MP3 player market, however, the company also supplies the technology for hard-drive designs by Rio, including the Rio Carbon and Nitrus, and also by GoVideo, Creative and Memorex.
“Engineers from Rio and SigmaTel have worked together for years improving MP3 software and creating great value for the consumer,” said Vic Pacor, president of D&M Holdings. “We are transferring the Rio technical and engineering resources to SigmaTel, where they can be better leveraged through SigmaTel’s considerably larger scale in the MP3 business,” he said. “We received an attractive offer for the Rio assets that we are selling, and we have secured access to enabling technology for the MP3 category of products without carrying the full cost of the technology,” Pacor said.
D&M Holdings publicly disclosed in May that it was examining strategic options to reduce the effect Rio’s losses had on the company.
D&M Holdings is expected to recognize approximately (US) $7 million extraordinary gain in the second quarter of the 2005 fiscal year. D&M Holdings will not adjust the FY05 profit and loss forecast at this time because it is currently examining additional strategic options for Rio, and the financial impact of such options is unknown.