INDUSTRY UPDATE

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US: CARLSBAD AND IRVINE, CALIFORNIA

Jim Austin

In a February 15 press release, Sound United, parent company of Denon, Marantz, Bowers & Wilkins, Polk Audio, Classé, Definitive Technology, HEOS, and Boston Acoustics, announced that it had “entered into a definitive agreement to be acquired by Masimo Corporation.”

Masimo, according to that company’s simultaneous press release, “is a global medical technology company that develops and produces a wide array of industryleading monitoring technologies, including innovative measurements, sensors, patient monitors, and automation and connectivity solutions.” The price: an impressive $1.025 billion. Masimo’s market capitalization—its value—is estimated at $12.6 billion.

Does that sound like an odd combination—a medical-equipment manufacturer buying a hi-fi company? It does to me, and apparently it does to a lot of people. Masimo’s investors voted with their wallets: Immediately, Masimo’s stock price dropped 37%. As I write, it’s still way down, trading just below $150/share, far below the $220 it was trading at before the deal was announced.

Is Masimo founder, Chair, and CEO Joe Kiani merely an audiophile who wanted to own a hi-fi company? Well, maybe. “I have long been a fan (and proud owner) of Sound United’s iconic brands and am honored to steward them through the next generation of technological evolution,” Kiani said in the Sound United press release. But the rationale Masimo offered in its own press release suggests that it sees serious synergy: “We see significant opportunities to cross-leverage technologies, bringing Masimo’s clinically superior solutions into the home and on-the-go as well as bringing Sound United’s premium technologies into the hospital to advance our hospital automation connectivity and cloud-based technologies.” Hi-fi in the hospital? Pulse oximetry in the listening room?

Kiani went on to say something that may hold a clue to the company’s intentions: “The technology and expertise within Sound United will serve us well as we aim to augment our Masimo SafetyNet strategy.” “SafetyNet” is Masimo’s patient remote-monitoring technology. My guess: Masimo bought Sound United because it wants HEOS, Sound United’s “Home