(September 20, 2024) If you're a fan of Sound United and its premium audio brands like Bowers & Wilkins, Denon, Marantz, and Polk, you may have caught wind of financial issues surrounding its parent company, Masimo, and an impending board room battle. Well, the battle has taken place, and the results strongly suggest that Sound United is on a fast track to the chopping block.
Here's the quick and dirty of how we got here. Sound United was acquired by Masimo, a global medical technology company known for its advanced monitoring devices, for roughly $1 billion in April of 2022. The acquisition raised eyebrows because it seemed like an odd pairing—medical devices and high-end audio equipment don't exactly go hand in hand. At the time, Masimo CEO Joe Kiani was enthusiastic about the deal, seeing it as an opportunity to leverage Sound United's consumer channels to distribute Masimo's consumer healthcare products. I've also heard rumblings that Masimo was interested in accessing Sound United's HEOS technology, though Masimo has not publicly confirmed that suggestion.
Fast forward to 2024, and the marriage of consumer healthcare and AV technology has been rocky at best. Yes, Sound United's brands have continued to innovate and craft extremely popular equipment, but Masimo's stock price took a significant hit after the acquisition, dropping nearly 40% on day one, and has yet to recover fully. Of course, losses never sit well with investors, who've remained concerned that the company strayed too far from its core competencies.
More recently, a proxy battle with investor Quentin Koffey and his hedge fund, Politan Capital Management, took hold. Politan wasn't pleased with Masimo's direction, arguing that the Sound United deal was a financial mistake necessitating leadership changes. Yesterday, a vote took place, and Politan succeeded in getting two nominees elected to Masimo's board, effectively ousting Joe Kiani from his seat and putting Sound United's status in jeopardy.
The arrival of new voices on the board has sparked growing speculation that Masimo will sell off Sound United and refocus on its core medical technology business. And that, in a nutshell, is where we find ourselves today. Sound United and its iconic brands appear to be in limbo, and finding a suitable buyer could be challenging. In the few conversations I've had about Sound United's status, I've yet to hear of a confirmed, serious buyer.
For consumers, the immediate impact will likely be minimal. In the short term, Sound United brands will continue to produce the high-quality products they're known for, and support will remain in place. In the long run, though, a sale could lead to changes in product development and customer service, even wholesale changes to the existence of specific brands. Whether that's good or bad remains to be seen. I'll keep my eye on this developing story, though I suspect Masimo will likely play its cards close to its chest.
