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Masimo Gets into Consumer Tech with “Puzzling” M&A

Image courtesy of Michael Vi / Alamy Stock Photo IMG_2022-2-16-141357.jpg
The Irvine, CA-based company is set to acquire Sound United for $1.02 billion in a deal that some analysts are questioning.

Masimo is diving deeper into consumer tech with its latest proposed acquisition – a move that has left some analysts puzzled.

The Irvine, CA-based company said it was putting up $1.025 billion to acquire Sound United, a consumer tech company with a portfolio of headphones and speakers as well as a software platform to connect devices in the home to the cloud.

Masimo announced the deal Tuesday afternoon but offered little strategy about the acquisition – noting more would come later this year.

Masimo said it will leverage Sound United’s expertise across consumer channels to accelerate the distribution of Masimo’s expanding portfolio of consumer products. The resulting company will benefit from a professional and consumer engineering function focused on products that make an impact on the lives of our consumers.

“We’re excited about this transaction and see significant potential in combining our expertise in consumer electronics and audio engineering with Masimo’s strengths in healthcare and monitoring,” said Kevin Duffy, CEO of Sound United, in a release. “With our track record of industry-first innovation, best-in-class products, and a global distribution network, we are the ideal partner for Masimo to transform the consumer healthcare experience. I look forward to working with the Masimo team to enrich the lives of consumers.”

Marie Thibault, an analyst with BTIG, wrote in a research note “We were caught off guard by both the size and scope of this deal, as it is much larger than Masimo's past transactions and falls well outside traditional MedTech. Our understanding is that Masimo intends to leverage the Sound United platform, relationships, retail channels, and management expertise to accelerate traction within the consumer channel as the company undertakes the shift from the hospital to the home.”

She added, with Sound United posting ~$900 million in CY2021 revenue, this deal transforms MASI into a blended MedTech and consumer tech company.

The acquisition is expected to close in the middle of 2022.

This isn’t the only multi-billion-dollar deal in 1Q21 that has seen medical device makers go outside of their wheelhouse.

In early January, Stryker stepped away from deals involving capital equipment and elective procedures by noting it would acquire Vocera Communications for $3.09 billion. The deal would help Stryker cross over into the digital communications realm.

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