Bang & Olufsen AS, the Danish maker of upmarket sound systems and televisions, on Friday said it had entered a partnership with LG Electronics Co to outsource its production of televisions.
The struggling Danish firm, which said in November last year it was in talks with a potential buyer, said the deal “will address Bang & Olufsen’s key challenges related to scale and complexity.”
“Bang & Olufsen’s total production is around 30,000 TVs per year... By comparison, LG sells 40 million TVs per year,” Bang & Olufsen chief executive officer Tue Mantoni told reporters.
Photo: Bloomberg
Working with the South Korean company would allow the Danish firm to leverage its economies of scale while remaining a niche, luxury brand, he said.
“We will work with them on innovation and technology in some of the areas where it’s important to be bigger,” Mantoni said.
The group, which also makes sleekly designed speakers, soundsystems and headphones, said it would now focus on its core know-how in design and acoustics.
The move would result in annual savings of between 150 million and 200 million kroner (US$22.68 million and US$30.24 million) and would bring it closer to a 7 percent margin target for earnings before interest and taxes, it said.
The partnership’s first TV using organic light-emitting diode displays — screens that deliver a more vivid picture quality and consume less electricity — is expected to be launched next year.
Last month, LG unveiled its first modular smartphone, the G5, which is equipped with a sound system developed by Bang & Olufsen.
The Danish company said the talks with a potential takeover offer were continuing, but that no binding offer had been made.
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