For about an hour, Bang & Olufsen A/S shareholders thought salvation was in sight. The possibility of a takeover, based on vague comments by the chairman of the maker of luxury TVs and sound systems, drove the stock 15% higher Friday morning.
Then the balloon popped and investors were thrown back to the reality of losses that have erased half the Danish company’s value this year.
With a market capitalization that has shriveled to about $270 million, you could buy the company for the equivalent of roughly 3,600 of its most expensive speaker sets, sleek standalone items that are renowned for marrying design and sound quality.
“B&O wanted to do too many things at once," said Claus Wiinblad, head of equities at ATP, Denmark’s biggest pension fund with about $120 billion in assets. For all that, the company had “too few product launches," he said in an interview last week.
“B&O is once again in a crisis," said Anders Schelde, chief investment officer of MP Pension, a B&O investor with about $18 billion in assets under management. “It’s difficult to see whether the past year’s problems are only due to execution issues, or whether there’s something that goes deeper."
The B&O chairman, Ole Andersen, was quoted in the newspaper Borsen on Friday as saying that the company is “in a situation where we need a contingency plan, and we of course have one." That followed his acknowledgment at the annual general meeting last week that B&O’s performance was “very unsatisfactory."
If Andersen, 63, is considering selling, are there any potential buyers? The chairman, who has held that position since 2010, rebuffed overtures from Sparkle Roll Group Ltd in 2016. Andersen said at the time there was too much uncertainty surrounding a potential bid from the Chinese firm, which three years ago made clear it wanted to build a stake that today hovers around 15%.
Now, B&O’s main attraction may be simply that it’s so cheap, said Per Hansen, an investment economist in Copenhagen at Nordnet. But it’s not clear there are willing buyers, he said.
ATP holds about 12% of B&O, making it the biggest shareholder after Sparkle Roll, which is controlled by Chinese billionaire Qi Jianhong and owns about 15%. The third-biggest owner is Nordea Bank Abp, which holds roughly 8.5%, according to the latest regulatory filings.
This week, Andersen is due to present the investment case for the company to market participants. More specifically, he will head to the markets department of Danske Bank, where he was chairman until being ousted last year in connection with his botched handling of a money laundering scandal. According to the investor relations department of B&O, Andersen will do the presentation following an invitation from Danske Markets.
Founded in 1925 as a radio manufacturer, several B&O products have achieved an iconic status and are displayed at numerous museums, including the Museum of Modern Art in New York.
“Our trust in the B&O brand is intact," Wiinblad at ATP said. “It’s important that B&O takes the right decisions to create the most value for us as shareholders." bloomberg