Pioneer Corporation has spun off their DJ division into a new company, Pioneer DJ, and sold 85% of that new enterprise to KKR. The share purchase agreement is reportedly worth $551 million with the result that the new concern will be owned 85.05% by KKR and 14.95% by Pioneer. Pioneer and KKR will jointly leverage their respective business resources, brand power, and technological capability, as well as global-technology and media-industry investment experience, and networks for the further growth of Pioneer DJ.
Susumu Kotani, Representative Director, President and CEO of Pioneer, said, “As we accelerate our efforts to concentrate management resources on our car electronics business, Pioneer has been seeking the optimal partner to further the globalization of our DJ equipment business and expand the brand. We are pleased to have reached an agreement with KKR on the purchase of Pioneer DJ. KKR has a wealth of experience in the technology and media industry globally, and we are confident it has the expertise to drive Pioneer DJ forward.”
Hirofumi Hirano, Member of KKR and CEO of KKR Japan, said, “Pioneer has built a leading global DJ equipment business based on its powerful brands and excellence in matching product development to market requirements. KKR will work together with Pioneer DJ’s innovative management team and employees, and our investment partner Pioneer, to support further long-term growth of the business.”
Who IS KKR?
KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners’ capital and brings opportunities to others through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds.
The Future: Pioneer cites the motivation for selling off their DJ division stems from a renewed focus and a consolidation of resources around their car audio division. However, this is somewhat of a smoke screen when looking at the timing of the deal and the equity breakdown. Pioneer may have taken a hard look into the future and has decided that their DJ hardware division doesn’t have a long life expectancy, and wants to cash out while they still own the global installed club base with their CDJs and mixers.
KKR may believe they can take the brand to the next level with an infusion of cash and additional resources to squeeze more profits before looking for a buyer. However, if this is a flip play by KKR – one reason why Pioneer was looking to still retain an equity share – who do they think will pony up the big bucks for Pioneer DJ in the near future?