It would have brought so many key consumer AV brands under one roof - Sound United already has Denon and Marantz, so that bringing Onkyo and Pioneer into the stable seemed to have obvious economies of joint development.
Then again, given the clear similarities between Denon and Marantz equipment since the two combined forces, would there be any point in having four brands all releasing similar gear at the same time? So when Onkyo announced in May that its AV-related business and that of Pioneer would join Sound United under its holding company Viper Holdings, there were mixed feelings among much of the industry.
But now it's been cancelled. There was a November 30 deadline set for the conclusion of the business transfer including what Onkyo Corporation's Japanese press release of October 4 describes as "all relevant contracts, secure funding, and other necessary business".
"It is unclear that the transfer will be completed by November 30, 2019," says Onkyo (translation).
"Because it was determined that it would not be a good idea to be bound to each other in the future, the transfer agreement was terminated and the transfer of this business was suspended.
We have reached an agreement between the two companies on what to do."
"Onkyo agreed to assign its Home AV related business to Sound United in order to focus its business resources and technology in the two areas it believes to have strongest growth potential – Digital Life portable products and OEM products and services targeting the B2B space. Onkyo’s rationale was that the combination of Onkyo’s already world-class premium brands, engineering and manufacturing capabilities with Sound United LLC’s (“Sound United”) strong portfolio of Denon, Polk Audio, Marantz, Definitive Technology, HEOS, Classé, and Boston Acoustics would well position the new group to capture the future growth of music and entertainment in the home. The arrangement would have allowed Onkyo to continue to capture the growth of this business through future licensing royalties. Therefore, on May 21, 2019 Onkyo entered into an Agreement with Viper Holdings, the holding company of Sound United, and the Transfer was approved by Onkyo shareholders at the general meeting of shareholders on June 26, 2019.
"However, the completion of the transaction was subject to several conditions, including the finalization of all definitive agreements, completion of satisfactory due diligence, securing of committed financing and various other required approvals. At this point, Onkyo and Viper Holdings have mutually agreed to terminate the Transfer based on the determination that a closing cannot be achieved by November 30, 2019, the expiration date of the Agreement. Onkyo still believes in the value of combining these businesses and will remain open to future discussions should conditions change but for now Onkyo has determined that it is time for the organization to return to dedicating its attention and resources to running its Home AV business independently.
"Therefore there will be no Transfer and the Agreement is hereby terminated. The impact on Onkyo's consolidated financial results for the fiscal year ending March 31, 2020 due to the events leading up to and the termination of this Transfer is currently being evaluated and will be disclosed as soon as it becomes clear.
"In order to further invest in its business and reinforce the group’s overall financial health Onkyo is actively raising new financing, considering new alliances and making long-planned internal changes, which were put on hold for this Transfer, to improve its profitability and competiveness."