Reuters New Story:

14:36 16Apr2003 RTRS-D&M Holdings to buy Sonicblue's ReplayTV, Rio

NEW YORK, April 16 (Reuters) - Japan's D&M Holdings Inc. <6735.T> won a bankruptcy court auction to acquire Sonicblue Inc.'s <SBLUQ.PK> ReplayTV television recording service and Rio portable audio unit for about $36.2 million, Sonicblue said on Wednesday.
D&M Holdings said it bought inventory, receivables, intellectual property and capital equipment, and that it would also take over certain contractual relationships and liabilities. It intends to keep all ReplayTV customers and will design and manufacture a line of ReplayTV and Rio products.
D&M added that the costs related to the acquisition will be slightly dilutive to its earnings in fiscal year 2003 but add to earnings thereafter. In addition, it said it remains comfortable with the consensus market analyst earnings per share estimates for fiscal year 2003.
On the surface, the price was cheaper than the $40 million, plus assumption of some $5 million in liabilities, that D&M agreed pay Sonicblue in a similar agreement reached in March, after Sonicblue filed for Chapter 11 bankruptcy protection in the northern district of California in San Jose.
That pact with D&M, the parent company of established high-end audio equipment makers Denon Ltd. and Marantz Japan Inc., fell through, which left the assets up for auction.
ReplayTV is the brand name for Sonicblue's personal digital recorder, a set-top box that allows users to save television programming to a hard drive and play it back when they choose.
The Rio unit is best known for making the first mainstream device to play music in the popular MP3 format, and also makes other portable music players.
Santa Clara, California-based Sonicblue had hoped to sell the units as a whole rather than to a suitor interested in dismantling the service.
Sonicblue Chief Executive Greg Ballard on Wednesday said the product lines would "continue to compete successfully in the marketplace," and that many, if not most, of Sonicblue's employees will continue their work.
The transaction is expected to close in approximately 10 days, D&M said.
Earlier this month, the California bankruptcy court approved Sonicblue's sale of its GoVideo business unit, which makes DVD players and digital home theater systems, to Opta Systems LLC. Terms of the deal were not disclosed.