The Danish luxury stereo and TV maker Bang & Olufsen, also well known for its implication in high-end automotive products, has announced it decided to sell its auto division to Harman.
Bang & Olufsen had been battling losses for half a decade, having negative turnaround for the group pretax figures in three of the last five years and now the deal will bring much needed cash. Harman will make an upfront payment worth about 1.17 billion Danish crowns ($168 million) and then will settle the arrangement by making annual license payments of more than 12.7 million crowns for two decades. “The strategic focus and the financial implications of the cooperation (with Harman) will allow Bang & Olufsen to continue to invest in product innovation, retail and brand marketing to realise the full potential of the consumer business,” commented B&O chief executive Tue Mantoni.
The company already hat to axe 125 positions as part of a strategy to slow annual expenses by 100 million crowns. The deal implicating the automotive unit also signals the company’s drive to focus on the traditional Bang & Olufsen AV luxury brand and the newer B&O Play business that seeks to attract a younger audience. The company’s automotive unit had made a revenue of 28 million crowns during the third quarter of fiscal year 2014/2015, with the rest of divisions in the group making up around 629 million crowns. Following the sale announcement, the firm’s shares jumped almost 40 percent to 68 crowns, with analysts considering the deal a positive one.