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Gibson Guitars Buys Majority Stake In Teac

4/07/2013 08:00:00 PM Eastern

TOKYO – Gibson Guitars, which last year bought a 51 percent stake in Onkyo USA, is buying a 54.4 percent stake in Japan’s Teac to share technology and marketing ideas and reduce expenses, the companies said.

Gibson is buying 157.4 million shares at 31 yen per share, or $51.8 million based on a conversion rate of 94.1 yen to the U.S. dollar.

The transaction represents Gibson’s largest investment to date in another company.

Gibson, which also bought a stake in Onkyo USA’s parent in 2012, offers pro audio equipment and musical instruments. Teac offers a range of products including pro and consumer audio, broadcast equipment, medical equipment, in-flight entertainment systems and recordable optical discs.

In the U.S., the three companies have an opportunity to work together to reduce costs, Gibson and Teac said in a prepared statement.

Gibson stands to benefit from Teac’s technology, and Teac stands to benefit from Gibson’s “marketing and distribution strength,” said Gibson chairman/CEO Henry Juszkiewicz during a press conference here.

Said Teac president Yuji Hanabusa, “We can work together to reduce costs and bring benefits to all three parties.” Although Hanabusa said he had no concrete examples yet to offer on cost savings, he said the combination of companies “will be a huge benefit to all of us.”

In their prepared statement, the companies said the deal will expand “the size and reach” of Gibson’s pro audio business with products that both complement and build upon [Gibson’s] KRK, Cerwin-Vega!, and Stanton portfolio of world-class studio monitors, sound reinforcement equipment and DJ gear, respectively.

The deal is “yet another step in Gibson’s aim to become the largest music and sound business in the world,” the statement said.

Spokespeople for Onkyo USA and Teac’s U.S. operation didn’t return requests for comment.

The companies’ statement also cited gains from:

• expanding Gibson’s access to Asian markets for all Gibson products;

• “operational cost synergies that allow both TEAC and Gibson to leverage back-office costs across its selected segments within the United States;”

• “overlapping channels for both the pro and consumer audio products in the United States [that] offer an opportunity to combine logistics with Gibson and Onkyo USA;” and

• greater scale in the EMEA countries “with an opportunity to consolidate logistics through Gibson’s warehouse.”

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