Historically, things have never really panned out that well for companies that sell off their main business component. However, renowned audio brand Sennheiser hopes to change that. News finally came out about Sennheiser selling its consumer audio business to another consumer audio company: Swiss-owned Sonova, which is best known for developing hearing aids.
Back in February, Sennheiser revealed that it was actively looking for a buyer for its consumer products division because of “strong competitive pressure.” Despite Sennheiser hitting record sales back in 2019, the company still suffered substantial losses in terms of profit margins because of competitors across the globe. In an attempt to stay afloat, Sennheiser laid off 650 of its workers, and it revealed that they were open to trying anything just to ease the pressure on their consumer products division.
What does this mean for either company?
This sale means that Sennheiser will no longer develop and produce their well-loved audio devices in-house. Instead, Sonova will take the reins in terms of product development. Sennheiser calls the sale of their consumer products a “cooperation” with Sonova.
The Sennheiser brothers call Sonova, “… a partner who not only shares our passion for audio and a commitment to the highest product quality, but also very similar corporate values.” Overall, the company seems very hopeful about the sale of its consumer products to Sonova. However, many are skeptical about the nature of their partnership.
According to Sennheiser’s press release, their consumer electronics sector currently has 600 people employed. This sale means that Sennheiser would have to cut down on the number of its employees. While some of Sennheiser’s people might be retained, there’s a high chance that many of them will be let go. Some analysts even speculate that the quality of the new Sennheiser products following the sale’s close may degrade a little bit.
Sonova may assign Sennheiser’s top product developers to their hearing aids, and they may rely on the reputation Sennheiser has built over the years to push sales despite the decrease in product quality. While the Sennheiser name will not totally plummet, it may lose its footing as one of the leading consumer audio brands in the world and take a backseat compared to its competitors.
Still, you should take this with a grain of salt. As of writing, the deal between Sonova and Sennheiser has not been finalized yet, so there’s no way to ascertain what would happen once Sonova takes over. We will all just have to wait and see.
Closing the deal
Sonova revealed that their purchase of Sennheiser’s consumer audio business will cost around 200 million euros. Since Sennheiser generates annual revenue of 250 million euros, Sonova hopes to make back what it spent in no time. As mentioned, the deal between the two companies has not yet been approved, but Sonova is expecting to close it by the end of 2021 and is working toward securing Sennheiser’s consumer audio business.
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