By Lauren Thomas
Medical-technology company Masimo 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 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.
Write to Lauren Thomas at lauren.thomas@wsj.com
(END) Dow Jones Newswires
May 06, 2025 16:32 ET (20:32 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.