Denon / Marantz: Parent company comments on reports of business exit

Last Monday, heise online reported that statements from the US company Masimo suggest that its consumer division Sound United with brands such as Denon, Marantz and Bowers & Wilkins could be discontinued at the beginning of 2025 – and asked the company for a statement. This has not yet been forthcoming, but Masimo's Vice President EU Commercial Operations, Jason Dear, addressed the Group's European authorized dealers in a letter to heise online yesterday, Wednesday.

In the letter, Dear first addresses the presentation of the last quarterly report at the beginning of November, which was also mentioned by heise online. It reads: "Masimo indicated that if the Board does not pursue the spin-off of the consumer audio business into a publicly traded company, the consumer business should be treated as a discontinued operation." (all translation by heise online). According to the VP, it has been recognized that this has led to some confusion, which is why they now want to clarify this point.

The classification as a "discontinued operation" therefore "merely reflects an accounting adjustment in connection with the inclusion of the Consumer business in Masimo's consolidated financial statements. It has no impact on the day-to-day operations of the consumer audio business, our products or our service level." The focus would remain on ensuring the company's commercial success: "We are committed to you to continue to develop and deliver innovative, best-in-class consumer audio solutions while strengthening the positioning of our brands in the marketplace," said Dear

What's not in the letter

The letter comes from Masimo's office in Eindhoven (Netherlands), where the company has recently concentrated its local operations. Dear does not mention in his letter to retailers that the company has closed or is closing its offices in France, Finland, Switzerland and Germany.

heise online has also learned that Roland Krüger, the current manager of the Electronics product line for Denon, Marantz and Classé Audio worldwide, will be leaving Masimo on December 31. Krüger is considered a veteran in the industry with over 20 years of experience and has been the face of Denon and Marantz at trade fairs and other events, as well as a discussion partner and presenter in webinars and numerous social media videos from dealers and influencers. Krüger started out as a product manager at Denon and was later Product Support Manager for the D+M Group (Denon and Marantz) and (following its acquisition) Sound United for Europe. From January 2019, he was Head of Technical Marketing for the DACH region. As Krüger was involved in the product development and launch of new products – including their documentation –, he was considered the most important contact for many dealers and press representatives when it came to features and problems with the devices. His successor is not yet known.

Reports of offers

The letter also omits the possibility of spinning off the consumer audio business into a listed company. In fact, starting in mid-July, there were reports in a filing with the US Securities and Exchange Commission (SEC) that Masimo and an unnamed third party had entered into a non-binding agreement to sell a majority stake in the company's consumer audio and consumer health business. The third party is said to have offered to acquire a stake in Masimo's consumer business for a purchase price of USD 850 to 950 million in cash and free of debt. The condition is said to have been the successful completion of a six-week due diligence process. Masimo granted an exclusivity agreement in relation to the potential joint venture until mid-August.

On August 16, Masimo then notified the SEC (PDF) that this exclusivity period had expired and that Masimo and the potential JV partner were actively continuing their discussions and negotiations regarding the potential joint venture without exclusivity. Masimo has also received separate unsolicited inquiries from other potential (also unnamed) acquirers of its consumer audio business. The company intends to enter into discussions with these companies through its financial advisor Morgan Stanley.

Masimo concluded at the time that its board would "seek and evaluate the optimal, value-maximizing structure for the separation of Masimo's consumer business". Among the alternatives Masimo mentioned were joint ventures, a spin-off of the consumer business into a new public company or the complete sale of the consumer audio business, either with or without the consumer health business. (nij)