The Strategist

Chinese Got Interested in Danish Bang & Olufsen

03/22/2016 - 14:15

The Chinese company Sparkle Roll Group, specializing in sale of luxury goods, is negotiating purchase of the Danish manufacturer of luxury class audio and video Bang & Olufsen. For several years, the latter is reporting with a loss due to a fall in demand for audio and video systems. Possible amount of the transaction and its terms were not disclosed.

axeldeviaje at
axeldeviaje at
Today it became known that a Hong Kong company Sparkle Roll Group is in talks to buy Bang & Olufsen (B&O), a Danish company specializing in production of premium class audio and video. Sparkle Roll sells luxury goods in China, including Rolls-Royce and Bentley cars, expensive watches, wine, cigars, and so on. As Bloomberg reported with reference to Sparkle Roll’s representatives, negotiations are still continuing, as the parties have not yet reached agreement on several issues. The company did not report on the possible terms of the deal and the price, but is claiming that the price should be reasonable and reflect "significant uncertainty and substantial investment required for further development and growth." Previously, B&O has already concluded an agreement with Sparkle Roll over the partnership in China. As the head of Sparkle Roll Qi Jianhong put it, «B&O will benefit from the change in ownership structure compared to the current, which will allow the company to free up resources to accelerate development and will contribute to the consolidation."

In recent years, B&O has faced a decline in demand for its products due to general decline in popularity of audio and video. Partly it was caused by the environment where people are increasingly listening to music on mobile devices, not on their home stereo. B&O was founded in 1925 in the Danish town of Struer, initially the company was producing radios. Over the past three years, the company has never been able to report a profit. The market capitalization is $ 455 billion. Even in 2014, B&O’s CEO Ole Andersen said that B&O is too small to remain independent, and that it either it should get rid of any of the units, or look for investors. Last year, B&O has sold its car audio production business to the Chinese company Harman International Industries, stating that it was going to focus on consumer products. Last week, the company announced a partnership with LG and devolved TV production on outsourcing.

B&O’s shares today rose by 8%. Over the past year, the company's shares fell 14% in total.