Rumors that Pioneer would be offloading its highly profitable DJ equipment arm have been circulating for a couple of weeks now, and today the news was confirmed by Reuters:
Japan’s Pioneer Corp is to sell its disc-jockeying audio equipment unit to private equity firm KKR & Co LP for around 59 billion yen ($550 million), it said on Tuesday, as it outlined a growth strategy centred on its automotive electronics business.
Under the latest deal Pioneer said it would spin off its DJ unit, which makes equipment such as speakers, mixers and turntables, into a separate company called Pioneer DJ that it will then sell to KKR by the end of March next year, leaving it with a 14.95 percent voting stake in the new company.
Reuters also reports that, while the DJ business is a lucrative one for Pioneer with a 20% operating margin and annual sales of $200 million, the company plans on focusing on its automotive electronics business.
KKR is most well-known for its 1989 buyout of RJR Nabisco, the largest leveraged buyout of all time when adjusted for inflation ($55 billion), memorialized in the book (and 1993 HBO movie) Barbarians at the Gate. Their current portfolio consists of about 100 companies.
Image by Merlijn Hoek, via flickr creative commons.