Bang & Olufsen Ends China Takeover Talks, Sending Shares Lower

  • Latest twist in an uncertain, months-long sales process
  • End of talks provides clarity for shareholders, company says

Bang & Olufsen A/S terminated talks with its billionaire Chinese suitor and biggest shareholder, after he missed several deadlines to make a full offer for the Danish luxury hi-fi system maker or substantiate an ability to do so. The stock lost as much as 13 percent.

Friday’s decision is the latest twist in an uncertain, months-long sales process for the company and risks a disappointing outcome for investors in the Danish company. Qi Jianhong last week bought stock to boost his stake to almost 19 percent, following talks to buy all of Bang & Olufsen. Efforts to sell the company had produced just one suitor in Qi, who is also the largest shareholder of Sparkle Roll Group Ltd., a luxury-goods distributor listed in Hong Kong.

“Obviously, I can’t rule out a future offer from Sparkle Roll or someone else, but it’s the assessment of the B&O board that there won’t be any offer from Sparkle Roll,” Bang & Olufsen Chairman Ole Andersen said in an e-mail. “Now, B&O employees and retailers need to be able to concentrate on the business.”

Qi no longer sees the need to buy all of the electronics maker after accumulating his stake, a person familiar with his thinking told Bloomberg last week. A majority would be sufficient to press a strategy of expanding distribution of Bang & Olufsen’s stereos and TV sets in China, the person said at the time. Qi is content to wait before buying more stock, and doesn’t want to pay more than 70 kroner a share, far below the 85 kroner he spent buying Delta Lloyd NV’s holdings, the person said.

Patrik Setterberg, an analyst at Nordea Bank AB, has said that relying on a single individual would only increase the chance talks would fall through. Setterberg said Friday in an e-mail that B&O’s fair value is 60 kroner a share, even including a successful turnaround of the business.

Shares in Bang & Olufsen traded 6.4 percent lower at 73.50 kroner as of 5:18 p.m. in Copenhagen, for a market value of 3.2 billion kroner ($485 million).

B&O, worth about $2 billion a decade ago, has sought a buyer for years to help it revive its fortunes. The maker of $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 music systems. Reports of takeover interest have appeared intermittently since 2008, when former chief Torben Ballegaard Soerensen was ousted and disappointing holiday sales led the shares to lose more than a quarter of their value in a day.

“In its lengthy dialog with Sparkle Roll, Bang & Olufsen’s board of directors
has on several occasions been provided with indicative deadlines for Sparkle
Roll to come to a resolution in respect of its launch of a tender offer,” the Danish company said in the statement. The latest of these deadlines expired Friday, the company said.

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