BREAKING NEWS
In a tersely worded release, Sound United announced today that its deal to acquire the Onkyo, Integra, Pioneer, and Pioneer Elite brands is off. Originally announced in May, the deal was said to be conditional on the completion of due diligence, the signing of “definitive agreements” and other specific elements. Apparently, that process was not successful.
See more on this surprising, but rumored, outcome…
Announced back in May, around the same time as the SnapAV/Control4 deal, this seemed like a huge deal. Although a bit of a confusing one, as these potentially newly acquired brands conflicted in the market with several of Sound United’s existing brands, such as Denon and Marantz.
Nonetheless, with the successful completion of this deal Sound United would have essentially owned the middle market in AV receivers. Now of course, that is all moot.
Rumors Have Been Flying
For several weeks now, I have heard rumors of trouble with this deal…but neither side was talking – so it was difficult to ascertain just exactly what was going on.
At this point, we have mutually agreed that it is in the best interest of both organizations to terminate the proposed acquisition. After months of rigorous work and negotiations, it became apparent that all of the necessary closing conditions couldn’t be satisfactorily achieved.
Sound United statement
Onkyo Corporation Statement
Onkyo Corporation in Japan issued an equally non-specific announcement that both sides have agreed to call “the business transfer” off. Here to, no reasons were provided other than to suggest that the requirements from Viper Holdings as to what had to be completed by Onkyo pre-closing…while still in negotiations on a final deal…could not be completed by the time of the deal’s expiration as defined in the initially signed term sheet.
“However, in order to execute this business transfer, it was necessary to satisfy various conditions such as the conclusion of all relevant contracts, securing funding, and other necessary approvals. Although it was difficult to carry out and continued efforts toward implementation while discussing [ed: negotiating?] with Viper Holdings, it is not probable that the transfer will be completed by November 30, 2019, the expiration date of the transfer agreement[.] In such circumstances, the two companies agreed to terminate the transfer agreement and cancel the business transfer because it was determined that it would not be a good idea to be bound by the transfer agreement in the future. “
Onkyo statement [machine translation]
What Was the Specific Reason?
What is not known is the specific reason for the abandonment for this deal. Perhaps certain funding requirements were too onerous…or possibly, various sign-offs from related parties were not able to be secured. As the rumor mill ground, there was word of potential new bidders – but I have NOT been able to confirm any of this.
So the situation remains fluid. Onkyo had planned to focus on their “Digital Life” division with headphones and assorted products going forward. It appears that will continue…as will their plan to relaunch their previously shuttered OEM manufacturing business. However, they likely had planned to jumpstart that business with their newest customer…Sound United.
Onkyo’s Plans Now in Question
With Sound United out of the picture, it is not clear where Onkyo will go. The company has posted a statement that they are assessing the impact that the loss of this deal will have on their fiscal year 2020 business.
So…stay tuned…
Ted,
after all dreadful steps and euthanizing most of the product lines, reduced to, almost nothing but Car Audio, how in the world, Pioneer managed to reduce their existence to this? To be acquired at all?
What I’ve been missing lately? Seems like decade in one year. Please do tell.
I just can’t believe Pioneer is even considered for sale.
One more question Ted, what has befallen your site comment system? Just went to several bookmarked articles supplied with great comment from your site, alas, all empty? I can read them via Web archive.org, but not on your site. I have allowed all required scripts on 2 browsers – nothing.
Volken,
You ask very good questions! Re: Onkyo/Pioneer – keep in mind that Onkyo owns Pioneer’s A/V division…NOT their mobile electronics. Pioneer split the company in two, keeping car audio for themselves and selling off their home av division to Onkyo some years back.
The answer to why this is happening is that the market has changed dramatically over the last 5-10 years, often in ways uniquely challenging to Japanese manufacturers. Sony, for example, went through something like 8 or 9 years of losing money – eventually selling off divisions to survive.
There are other negative trends, such in retail and in consumer preferences that have all played a part in making this business tougher than ever.
So the situation as you see it now, has actually taken several years to develop.
Re: My comment system. You, my friend, are very perceptive. In a nutshell, we have discovered an technical issue that sometimes prevent some or all of the comments to fail to display (although they’re still there, you just can’t see them). Long story short – we are in the process of moving to a new system (which may take a couple of months) which will resolve that and other problems. Please be patient and bear with me!
THANKS so much for your smart comments and quesations. Keep them coming!
Ted
Ted,
allow me to mention one preventive word of caution. Understanding the nature of spam and all technical reasons some go to systems with great promises. So you end up with no spam, but also (after some time) with no comments at all.
I certainly hope not, but If you are considering or advised to use Disqus system, it would take lengthy explanation, but, let me just say, among web developers, it has earned reputation as Killer of Blogs and Sites for a very good reason. Please, don’t make that mistake, anything else but Disqus.
Pioneer’s episode, just reminds me to ask you, what is the present state of existence with Toshiba?
Also, in the last two years, Pioneer’s Car audio range, has undergone some adolescent ideas about integration of car radio headunits. I understand fear of being “too late” with adopting trendy features, but I feel design minds behind those products lacks product culture. I have seen the same thing with some Yamaha’s MI range of products. Perhaps change of generations, but transition if not elegant like in previous decades.
regards
Volken
I wonder if this might have had anything to do with Onkyo’s pursuit of Sonos distribution, and Denon’s focus on the HEOS product.
Hi Rory,
Thats an interesting idea, but I don’t think so. Onkyo did not pursue Sonos…Onkyo USA did. Onkyo USA used to be a wholly owned subsidiary of Onkyo Corp of Osaka, Japan. Now, it is independently owned.
According to multiple sources, the Sonos decision came from the independent Onkyo USA which is seeking to build its US distribution business outside of Onkyo products.
What happened between Onkyo Corp and Sound United was likely not influenced by this decision by Onkyo USA.
Thanks for your comment and thanks for reading Strata-gee.com!
Ted