Harman Kardon pays $157 million for Bang & Olufsen’s car audio business

Bang Olufsen car speaker

Denmark’s Bang & Olufsen has announced that it has sold its automotive arm to Harman Kardon in a bid to shift the focus of its business and get rid of assets that aren’t considered core.

U.S.-based Harman Kardon reportedly paid €145 million (about $157 million) up front for Bang & Olufsen’s car business, and it will have to make annual license payments of at least $1.8 million for the next 20 years. Bang & Olufsen joins Harman’s vast portfolio of car audio-related brands which includes Becker, Infinity, JBL, Mark Levinson Audio Systems and Selenium.

Harman Kardon explained in a statement that it will not change Bang & Olufsen’s operating mode, meaning that consumers will not notice a difference in the company’s products in spite of the new ownership. Currently, a number of high-end manufacturers like BMW, Audi, Aston Martin and Mercedes-Benz offer Bang & Olufsen stereos, often times at an extra cost. Harman will retain this business model and continue to sell stereos to premium manufacturers. Notably, the firm is not planning on expanding Bang & Olufsen’s reach by moving down a notch on the market.

After suffering from years of pre-tax losses, Bang & Olufsen all but announced the sale of several key assets late last year. Speaking with Danish newspaper Belingske, chairman Ole Andersen explained that his company was too small to stay independent so it needed to either merge with another firm or sell off a few of its assets. It looks like Andersen has chosen the second option.

With its automotive arm divested, Bang & Olufsen is free to focus on other projects. Hewlett-Packard recently announced that it will shift away from Beats Audio technology and equip its Spectre, Omen and Envy models with Bang & Olufsen speakers.

In Denmark, Bang & Olufsen shares jumped 38 percent following the announcement.