Bang & Olufsen in Talks to Be Bought by China's Sparkle Roll

  • Chinese luxury-goods distributor also sells Bentleys, watches
  • B&O has struggled amid waning demand for high-end electronics

Bang & Olufsen A/S, the Danish maker of luxury consumer electronics, is in talks to be bought by its Chinese distribution partner Sparkle Roll Group Ltd. for an undisclosed amount.

Sparkle Roll, which also sells Rolls-Royce and Bentley cars as well as luxury watches, said in a statement that any price must reflect “significant uncertainty” around the brand and the investment required to expand Bang & Olufsen. The Hong Kong-listed distributor trades at half the market value of Bang & Olufsen.

New ownership would allow B&O’s management to focus on turning around the company and increase sales, said Qi Jianhong, Sparkle Roll’s largest shareholder according to data compiled by Bloomberg. B&O, which makes $8,000-plus TVs, has struggled to win buyers for its products as prices for flat-screen sets tumble and more people listen to music on smartphones rather than home hi-fi systems.

"B&O would benefit from a different ownership structure than the present in order for the company to free up resources, accelerate growth and facilitate consolidation," Qi Jianhong said in Sparkle Roll’s statement.

Shares of B&O rose as much as 8 percent and traded 3.7 percent higher at 71 kroner as of 11.34 a.m. in Copenhagen, giving the manufacturer a market value of about 3.1 billion kroner ($460 million). B&O stock has declined about 14 percent this year.

A sale of the 91-year-old electronics maker would mark the end of an era for a company known globally for its simple, clean Nordic designs. Bang & Olufsen is one of the last of the larger makers of hi-fi systems in Europe. Its sale would leave mainly niche players like U.K.-based Naim Audio Ltd. and Cambridge Audio. Ole Andersen, the chairman of B&O, told Danish newspaper Berlingske in 2014 that the company is too small to stay independent and must either scale back business areas or seek partners.

B&O partnered with Sparkle in 2012 to boost sales in China and last year said it would sell its automotive sound-system business to Harman International Industries Inc. to focus on consumer products. The turnaround wasn’t fast enough as it lost a large amount of money developing and building TVs, Chief Executive Officer Tue Mantoni said March 18 after announcing a partnership to outsource TV production to LG Electronics Inc.

Sparkle Roll distributes top-end cars, watches, wine and cigars in China, ranging from Bentleys and Bugattis to 100,000 yuan ($15,000) bottles of French wine. 

Like others in the luxury industry, Sparkle Roll has been hit by President Xi Jinping’s anti-corruption crackdown. Revenue has shrunk to HK$2.6 billion ($335 million) in financial year 2015, down 40 percent from financial year 2012.

Qi Jianhong was ranked 422nd on Hurun Report’s 2015 Rich List in China, which put his wealth at 8 billion yuan.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE