Masimo to Sell Audio Business to Harman in $350 Million Deal
The company is refocusing on its core healthcare business under a new CEO
Key Points
- Masimo is in a deal to sell its consumer-audio business to Harman International for about $350 million.
- Masimo’s foray into consumer audio began in 2022 with the acquisition of Sound United for about $1 billion.
- Activist investor Politan Capital Management pushed for the sale and the ousting of Masimo’s founder.
Medical-technology company Masimo MASI -0.85%decrease; red down pointing triangle is getting out of a failed foray into the consumer-audio business with a deal to sell the unit for about $350 million three years after making a $1 billion bet on audio equipment.
A soured deal
Harman International, a Samsung Electronics 005930 -2.16%decrease; red down pointing triangle subsidiary that makes JBL products and other audio and visual equipment, is set to buy Masimo’s audio operations in a deal that was announced Tuesday, confirming an earlier report from The Wall Street Journal.
The transaction would mark the end of a three-year experiment for Masimo that sent its stock plunging, drew in an activist investor and led to the ousting of its founder and chief executive officer.
In 2022, Masimo agreed to acquire Sound United, a high-end audio company whose brands include Bowers & Wilkins and Denon, for about $1 billion.
The deal was a bid by Masimo founder Joe Kiani to reach more retail channels such as Best Buy. The company’s main focus is making medical devices ranging from pulse oximeters to monitors for brain function as well as other health-focused wearables that offer consumers real-time data.
Wall Street and investors reacted poorly to the idea, shaving roughly $5 billion off Masimo’s market value in one day. The company is now worth around $9 billion.
An activist arrives
After the Sound United transaction, activist investor Politan Capital Management revealed a big stake in Masimo and began demanding changes.
Politan won a pair of board seats at Masimo’s 2023 annual meeting, including one for its founder Quentin Koffey. But it wasn’t enough. The firm returned again last year, seeking more board seats and a sharper focus on healthcare. Politan wanted to get rid of Sound United.
Koffey’s firm won two more board seats last fall and forced out Kiani.
Masimo in February appointed Katie Szyman CEO, and has been pursuing a fresh strategy. The stock is up almost 50% since Politan won its fight in September while the S&P 500 is down over the same period.
“Since I took over as CEO, a key objective has been refocusing our business to ensure we are allocating time and resources to areas of unmet clinical need,” Szyman said.
The Masimo deal adds to a strong start to the month of May for mergers and acquisitions. Already this week, a number of big transactions have been signed up, including Skechers selling the comfy sneakers brand to 3G Capital in a $9.4 billion deal, defying a recent slowdown in dealmaking with President Trump’s trade war.