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Though the design of Bang & Olufsen's high-end televisions are
highly regarded, there has been criticism that the loss-making
company's technology has failed to keep pace with that of
rivals.
"Some of the problems they've had are resolved today with this
partnership," said Sydbank analyst Morten Imsgard, adding that
the deal will strengthen the company's hand in the face of
takeover approaches and increases the likelihood of it retaining
its independence.
The 90-year-old company, which has failed to make a profit in
each of the past three years, said in November that it had
received approaches over a potential takeover. On Friday it said
that dialogue with a potential buyer is ongoing but no binding
commitments have been made.
Bang & Olufsen, known for its sleek designs and televisions
costing up to 60,000 Danish crowns ($8,540), said the agreement
with LG presents potential annual cost savings of between 150
million crowns and 200 million crowns when fully implemented
over the next three years.
The partnership will help the company to achieve technological
capabilities and scale needed to improve long-term
profitability, it said in a stock exchange announcement.
"The partnership will address Bang & Olufsen's key challenges,"
Chief Executive Tue Mantoni said in the statement.
(Reporting by Annabella Pultz Nielsen; Additional reporting by
Nikolaj Skydsgaard; Editing by David Goodman)
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