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David A. Grogan | CNBC
Bose Corp. will buy the McIntosh Group, a deal that will give the Massachusetts-based company control of one of the most storied names in high-end audio.
McIntosh will continue to make the high-end audio equipment it’s known for from its longtime headquarters in New York, said Bose CEO Lila Snyder. The deal also includes Sonus Faber, a company that makes high-end speakers by hand in Italy.
The purchase of the two audio workshops gives Bose access to the high-end luxury audio market, Snyder told CNBC in an interview.
“There’s an opportunity for luxury, where consumers are more aware, really interested in the heritage and the story, and the nature of the handmade,” he said.
Snyder, who will become Bose’s CEO in 2020, did not provide terms or a price for the deal. McIntosh was previously owned by Highlander Partners, a Dallas-based private equity firm.
McIntosh has been making high-end amplifiers and other audio equipment since 1949, and a single device can cost tens of thousands of dollars. Sonus Faber sells a pair of speakers for $140,000.
The purchase shows how Bose is navigating an environment where there is more competition in headphones and audio electronics than ever. Bose is privately held and does not disclose annual revenue, although it has sales of about $3 billion by 2023, according to Forbes. It has about 3,000 employees.
Bose is entering the high-end luxury audio market
Luxury audio — defined as products priced at more than $5,000 — will grow 12% in 2023 to about $2.8 billion in total sales, according to estimates from Futuresource Consulting. The deal will allow Bose to test the higher-end market for its products, which are already expensive — a pair of Bose headphones can easily cost $350.
“These are different customers that we cannot currently reach with our technology and products,” he said.
Snyder did not rule out the possibility of Bose producing McIntosh-branded headphones or other products.
“We think there’s a real opportunity in wearables in the luxury and high-performance space as well, which is what you’ll expect to see from us down the road,” Synder said.
Bose is best known for its speakers and headphones, including the QuietComfort headphone line, which was one of the first noise-canceling headsets to hit the market in 2000. It also sells soundbars, wireless earbuds, speakers and audio equipment for cars. It divested a group that builds sound systems for auditoriums and other professional environments last year.
The audio market has evolved since Bose was one of the top brands.
Bose now competes with some of the world’s largest companies, including Applewhich bought Beats Electronics for $3 billion in 2014 and released AirPods in 2016, targeting the premium headphone market.
There’s also a new audio-focused competition for Bose.
Sonos, best known for its home speakers, introduced its first noise-canceling headphones earlier this year, although the company is reeling from an app redesign in May that was poorly received by users. Bose also spent the last decade competing with smart speakers from the likes of the crowd Amazon and Google that they are often priced aggressively low to spur adoption.
The purchase of the two luxury audio workshops could help Bose grow in the car stereo market, which Snyder said makes up about a third of the company’s business. Sonus Faber produces speakers for Lamborghini cars, for example, and some Jeeps have McIntosh-branded audio systems. One possibility Bose likes is being able to integrate noise-cancelling technology into electric cars to make the vehicle quieter, he said.
“There are places right now where the Bose brand probably can’t go. Lamborghini is a good example,” said Snyder. “You really want the best kind of cutting-edge technology in a luxury or best-performing vehicle.”
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