As tipped by ChannelNews Pioneer Electronics has offloaded their lucrative disc-jockey equipment business to U.S. private-equity firm Kohlberg Kravis for $US550 million.
The Pioneer DJ product range is highly popular in Australia and is the #1 DJ brand.
In a statement issued to ChannelNews the Company said that they intend to focus on stereo systems and global positioning systems for cars.
The sale of the business, which includes turntables, comes a week after Pioneer signed a deal to sell its home audio-visual equipment business to Onkyo. No decision has been made on the future of the Australian operation however ChannelNews has been told that a distribution model is “more likely” over a subsidiary model.
The decision to offload their struggling consumer electronics business come five years after it exited its unprofitable television business, at the time Pioneer plasma TV’s were rated as the “best in the world” by several publications including SmartHouse.
The Wall Street Journal said that the two Japanese companies initially invited Baring Private Equity Asia in late June as a sponsor for the deal to restructure the audio-visual business, made up of the home theatres Pioneer is globally known for, but the Asian private-equity firm backed out in August.
“Our business selling DJ equipment would have required large amounts of investment to continue to grow, and we can’t afford to invest in it while also seeking to grow our in-car electronics operations,” Pioneer President Susumu Kotani said at a media briefing.
Pioneer will retain a stake of nearly 15% in the DJ-equipment business, which will keep Pioneer’s brand name. The business is a popular one, with a global market share of more than 60% and a profit margin of 20%, according to Pioneer.
“KKR will work with Pioneer DJ’s management team, employees and our investment partner Pioneer, to support the long-term growth of the business,” said Hirofumi Hirano, KKR Japan’s chief executive officer.
Pioneer has been shifting its focus to car electronics, such as audio systems and GPS for automobiles in recent years.
In Australia Pioneer has been hit by the downturn in the car industry.
