Pioneer Corp and KKR partner to create new Pioneer DJ
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Pioneer Corp and KKR partner to create new Pioneer DJ

Pioneer Corp and KKR partner to create new Pioneer DJFirst unpublished rumours, then Reuters news stories, and finally a huge amount of industry intelligence has led us to this point. Many names were in the pot, but it turns out that one important name wasn’t even thought about, and that’s Pioneer themselves. But the news is officially out  — Pioneer DJ is now in the hands of private equity firm KKR & CO, but with Pioneer Corp still involved. And to be 100% clear — it’s KKR, not KRK. So no, Gibson has not bought Pioneer OK?

Reading the first Reuters news story gives the impression that Pioneer Corp has simply bought Pioneer DJ, which on the face of it is true, but the press release from KKR themselves sheds more light on the deal:

Pioneer and KKR Agree to Pioneer DJ Share Purchase

– Companies to form partnership to accelerate global growth –

TOKYO & KAWASAKI, Japan–(BUSINESS WIRE)– Pioneer Corporation (“Pioneer”) and KKR today announced the signing of a share purchase agreement under which Pioneer’s business division that engages in the development, manufacturing and sale of DJ equipment will be spun off into a new company, Pioneer DJ*, which will be jointly owned by Pioneer and KKR.
(*provisional name)

Based on this agreement, KKR will acquire all of the outstanding shares of Pioneer DJ via holding company PDJ Holdings Co., Ltd. (“PDJHD”) for approximately JPY59 billion (approximately US$551 million at the exchange rate of US$1=JPY107). Pioneer will then acquire newly issued shares in PDJHD with the result that PDJHD will be owned 85.05% by KKR and 14.95% by Pioneer.

Pioneer’s DJ equipment business develops, manufactures, and sells equipment for DJs, including DJ players, mixers, controllers, headphones, and speakers. It is a leader in the DJ equipment market with strong brand image, reputation for technological differentiation, and high profitability.

Pioneer and KKR will jointly leverage their respective business resources, brand power, and technological capability, as well as global-technology and media-industry investment experience, and networks for the further growth of Pioneer DJ.

Susumu Kotani, Representative Director, President and CEO of Pioneer, said, “As we accelerate our efforts to concentrate management resources on our car electronics business, Pioneer has been seeking the optimal partner to further the globalization of our DJ equipment business and expand the brand. We are pleased to have reached an agreement with KKR on the purchase of Pioneer DJ. KKR has a wealth of experience in the technology and media industry globally, and we are confident it has the expertise to drive Pioneer DJ forward. Pioneer will retain 14.95% of the voting rights in Pioneer DJ and we will maintain a framework for cooperation to ensure the future growth of the company.”

Hirofumi Hirano, Member of KKR and CEO of KKR Japan, said, “Pioneer has built a leading global DJ equipment business based on its powerful brands and excellence in matching product development to market requirements. KKR will work together with Pioneer DJ’s innovative management team and employees, and our investment partner Pioneer, to support further long-term growth of the business.”

Yoshiaki Ide, Executive Officer and Division Chief Officer of Pioneer’s Pro. Sound & Visual Business Division, said, “KKR’s global investment activities support the growth of businesses in a range of industries, including those in the technology and media sectors. As such, we believe this partnership will enable the further expansion of our own business. With KKR’s support, Pioneer DJ aims to add further customer value and exceed expectations with accelerated product development and enhanced service. In addition, Pioneer, as an important shareholder, will provide ongoing support.”

Subject to approval by the relevant authorities and other customary closing conditions, the above agreements are expected to be completed by March 2015.

UPDATE: Press release directly from Pioneer too:

Pioneer and KKR announcement of the new Pioneer DJ Corporation*

(*provisional name)

Dear valued customers:

Thank you very much for your continuous interest and use of Pioneer DJ equipment.

As reported in our press release of September 16, Pioneer Corporation (hereinafter “Pioneer”) and Kohlberg Kravis Roberts (hereinafter KKR) is now proceeding with establishment of a new company tentatively named as “Pioneer DJ Corporation” hopefully by next March so that development, production and sales of our DJ equipment and related devices will be further enhanced.

KKR’s global investment activities support the growth of businesses in a range of industries, including those in the technology and media sectors. As such, we believe this partnership will enable the further expansion of our own business. Pioneer and KKR will jointly leverage their respective business resources, brand power and technological capability, as well as global-technology and media-industry investment experience, and networks for the further growth of Pioneer DJ.

In a new structure, we will continue to use “Pioneer DJ” brand and serving a wide range of DJs by developing innovative products not only for professionals but also for home-use.

We sincerely appreciate your continuous support and interest in the Pioneer DJ brand.
Lastly, we humbly hope that the new Pioneer DJ can live up to your expectations.

sign

Yoshiaki Ide
Executive Officer and Division Chief Officer
Pro.Sound & Visual Division

To nutshell this — Pioneer Corporation has sold the assets that run the Pioneer DJ brand (it is not a company as such right now) to KKR. They in turn will create a new company provisionally called Pioneer DJ, will then issue shares, 85.05% of which will be owned by KKR, and the other 14.95% will be in the hands of Pioneer Corporation. Clear?

Pioneer DJ was never a strictly a company, but now it is, with the same people involved, the same great products being put out, and everything on the face of it remaining as it is now. Time will tell how much remains the same, as such huge moves often mean changes, but it’s way too early to speculate on that one. But I would expect that having fresh money involved and a renewed purpose, Pioneer DJ will move onwards and upwards.

But as far as you’re concerned, it’s business as usual.

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Mark Settle
The Old Owner
I was the editor around these parts for the first two decades of the DJWORX journey. I’m on a creative journey at The Worxlab, and drop in occasionally here. Expect the odd article from me every now and again.
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16 Comments

  1. Good to know it will continue as a brand. As the name is what makes it. I feel it will leave the new separate company a bit exposed to future sale and purchases by other investment groups. Looks like KKR have done a good deal for themselves. Not so sure about the split in shares. 14. whatever % still with Pioneer seems a little low to me, but hey it is Pioneers business. Hopefully for the employees of Pioneer DJ it will be business as usual without sweeping changes or loss of jobs. I’m sure the question most DJ’s will be asking is will the prices come down. I expect not even in the long term if the business is profitable and equipment sales continue to grow then there is no need to change that. Only time will tell I guess.

      1. It’s business, you know the companies are private and sometimes these valuations are picked out of thin air (perceived value) instead of on true financial data. The company must be making money as pioneer wanted to keep some involvement. Who knows what else was thrown into the terms of the deal. We won’t know that is for sure. If both sides believe they got a good deal then that is good for them.

    2. KKR would have wanted Pioneer Corp to retain some ownership as it keeps both companies interests aligned. The Pioneer DJ staff and management will be moving to the new company and KKR will concentrate on adding value to the brand.

      How exactly they do that will be the really interesting story.

  2. As long as they stay ahead of the curve with more innovative products and do not change the way they make their equipment they will be just fine. They have one of the best product lines for DJ’s period. People complain about their pricing however they cover both ends of the marketplace very well between lower end and higher end. While a lot of their used CDJ’s and equipment still command high values relative to their new counterparts that just shows how much the industry as a whole regards their products and how well they last. It’s very seldom I hear of a pioneer piece of equipment failing due to being defective. I wouldn’t have trusted any other brand to buy a pair of used CDJ’s and I am very happy with the pair of 400’s I bought. They work flawlessly in spite of the wear and tear the previous owner put them through and I don’t know if anyone else’s decks would have lasted through it.

    1. “It’s very seldom I hear of a pioneer piece of equipment failing due to being defective”

      Eh? What industry do you work in?

      Master pot on the DJM 800 has has had a design fault in it since the beginning that causes it to fail within about 3 months of average club use. That same flaw has been carried all the way through to the DJM2000 and has only now been addresses by a ‘quick fix’ inclusion of a washer to stop any downward pressure making the part fail.

      The atrocious paint job on their DJM serious of mixers that fails within 1-2 months of normal club use.

      The insistence of STILL using the shittiest binding post ever invented on a £1700 mixer that you wouldn’t even put on a kids £50 toy mixer.

      The rubber pot knobs that wear down within 3-4 months of club use and cost 3 times more to replace than stock ones.

      If you compare the build quality of Pioneer mixers up against an equivalent A&H, Rane, Urei etc it falls far down the picking list.

      1. If you’re a Professional DJ like myself then we arew in the same industry Pioneer. Every manufacturer has good and bad products. I made no comparison to Allen & Heath. If I did I would agree that they make better mixers than Pioneer. I own an A&H Xone 22 and love it. Much better than any of the Pioneer mixers in the same price point in my own opinion. It’s durable, has a great feel to the controls and faders, and is laid out very intuitively. You noticed I mentioned nothing about mixers in my post right???

    1. “…..this partnership will enable the further expansion of our own business. Pioneer and KKR will jointly leverage their respective business resources, brand power and technological capability….”

      Key words – “Expansion” & “Leverage”.

      Let the rumour mill regarding expanding with leveraged funds begin.

  7. Thanks for this great article. It’s comforting to know that nothing serious will change any time soon. When Allen & Heath sold, their quality went south…hoping that won’t be the case here.