Baring Asia drops out of Japan electronics deal
Baring Private Equity Asia has abandoned plans to acquire the audio-video operations of Japanese car electronics maker Pioneer Corp - alongside the company's rival Onkyo Corp - three months after reaching a basic agreement.
Under the agreement, Baring intended to take a 51% stake in the business, with the division of the remaining 49% to be determined in consultation with the other two parties. However, according to Pioneer, discussions ended after it was decided it would be more efficient for the two strategic partners to negotiate integration without a financial sponsor.
"The three parties ceased discussions as they decided that the Home AV business needs to be considered from a long-term perspective as the business must be developed strategically and flexibly to quickly respond to the continuously changing business environment," the company said in a statement.
The potential size of the deal was never revealed, however Pioneer Home Electronics Corp. generated revenues of JPY108.2 billion ($1.06 billion) for the year ended March 2014, up from JPY96.2 billion the previous year. The division posted an operating income of JPY91 million for 2014, compared to a loss of JPY2.8 billion in 2013.
Pioneer's car electronics business is by far the largest profit center, accounting for 70% of the company's JPY498 billion in revenue last year. The division's profit of JPY12.4 billion exceeded that of Pioneer as a whole due to underperformance elsewhere.
Had it gone through, the deal would have been Baring Asia's first in Japan since it acquired a 100% stake in gold and jewelry recycler NetJapan in late 2012 for a undisclosed sum. The PE firm exited the investment in April to Orix Corp. for around JPY21 billion.
Baring has been investing in Asia since 1997 and has total committed capital of over $5 billion. It is said to be targeting $3 billion for its sixth pan-regional vehicle. The fund's predecessor reached a final close of $2.46 billion in January 2011 after just six months in the market.
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