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Marantz and Denon to Merge Operations

Marantz Japan Inc., its largest shareholder (49%), Royal Philips Electronics (AEX: PHI, NYSE:PHG), and DENON, Ltd., its largest shareholder (98%), Ripplewood Holdings L.L.C. today announced the establishment of D&M Holdings, Inc. a joint holding company to merge the operations of Marantz and DENON. The transaction is expected to close by May 2002 and will create a global company in the home theatre and audio-video (AV) market, while maintaining the established Marantz and DENON brands. D&M Holdings will employ approximately 1,650 people around the world and will succeed Marantz as a publicly traded concern on the Second Section of the Tokyo Stock Exchange (TSE 11: 6799).

Both DENON and Marantz are manufacturers of home theatre and AV products. This market has enjoyed rapid growth in recent years, due to the emergence of home theatre applications as well as an industry wide digital evolution. D&M Holdings will be well positioned to benefit from this organic growth through the advanced development of cutting-edge digital products by matching DENON and Marantz's expertise in digital AV and visual products as well as wireless technology. Moreover, Marantz and DENON expect to achieve a significant improvement in margins and cash flow by maximizing the synergies of the integrated operations.

Commenting on the deal, Tatsuo Kabumoto, CEO of Marantz stated, "The combination of Denon and Marantz, backed by world class companies like Ripplewood Holdings and Philips, establishes a platform on which we intend to build the world class company in the premium audio visual space." "Marantz regards the establishment of D&M Holdings as yet another important strategic step forward for the company following its acquisition of trademark rights and sales subsidiaries operating in Europe and the US from Philips last May," he added.

Mitsushige Sakamoto, CEO of DENON said, "leveraging the synergies of the merger and integrating DENON's digital A/V technology with Marantz's video and wireless technology, D&M Holdings will secure its position as a leading competitor in the home theatre market."

The basic terms for the establishment of D&M Holdings are:

• Marantz and DENON will set up D&M Holdings with its head office in Sagamihara City, Japan
• Mr. Tatsuo Kabumoto, the current Chairman and Representative Director and CEO of Marantz, will become the President and CEO of D&M Holdings
• All shares of both Marantz and DENON will be transferred to D&M Holdings, making both entities wholly-owned subsidiaries
• Mr. Mitsushige Sakamoto, the current Representative Director of DENON, will become President and CEO of DENON while Mr. Takashi Sato, the current President and COO of Marantz will become President and CEO of Marantz.
• Existing Marantz shareholders will receive one share of D&M Holdings for each Marantz share, and existing DENON shareholders will receive 0.4416 shares of D&M Holdings for each DENON share
• Ownership of Marantz shareholders and DENON shareholders in D&M Holdings will be 30% and 70%, respectively
• Philips and Ripplewood will have stakes of 14.7% and 68.6% in D&M Holdings, respectively
• D&M Holdings will be listed on the Second Section of the Tokyo Stock Exchange

Following establishment of D&M Holdings, the research and development, production and purchasing, and financial control activities of the two companies will be combined as soon as possible, to reinforce their competitive edge and deliver the identified synergies. The DENON and Marantz brand names will be maintained, as well as their sales and marketing and brand specific product and unique distribution channel.

For more information, visit their web site at http://www.denondj.com/.

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