We covered the first reports from last year regarding how parent company of Pioneer DJ proposed a commercial merger of Serato Audio Research. Now, there’s been big news that may decrease the bargain to a end: New Zealand’s competitive governmental agency, the Commerce Commission, has denied clearing for the package.
The first agreement, which is estimated to be worth$ 59 million US, was deemed a done deal by many in the sector. However, the potential monopoly situation that would result from the merging of the two companies was heightened by extensive publicity and criticism from inMusic ( Denon, Numark, Rane, and others ‘ parent company ).
The Overseas Investment Office reviews and approves any offer that is more than$ a specific dollar amount and involves an outside company acquiring a New Zealand-based business. The Commerce Commission ( or ComCom for short ) appears to have had the final say in the approval of the deal. The selection meeting was reportedly pushed back at least four days, but they eventually made it public today.
Here’s a few choice passages from ComCom’s determination to rise, posted on their website:
The Commission, according to Chairman Dr. John Small, was never satisfied that the merger would have the effect of significantly reducing competition in the markets for DJ applications and DJ hardware.
According to the Commission’s investigation, Serato and Rekordbox engaged in close competition with DJ technology. We did not consider the competition level that may result from the consolidation to be as high as the other DJ software providers, or the possibility of a new DJ application provider entering the market in the near future. So, we could not remove the real possibility that the merger would lead to significant cost increases for consumers and/or a lower-quality software offering, Dr. Small said.
We also expressed concern that the proposed acquisition would significantly lessen competition by making it more difficult for DJ technology vendors to contend with Pioneer DJ. The integration could give ATC the ability to either eliminate or worsen DJ hardware adversaries ‘ ability to integrate their goods with Serato because Seratato is a significant piece of software for DJ technology companies to integrate their DJ equipment materials with. We also expressed concern that the merger would give ATC access to its DJ hardware rivals ‘ economically sensitive information, including information about unpublished products shared during the integration process, giving ATC a competitive advantage and reduce the pressure on both ATC and its competitors to innovate.
However, when there is a fear of monopolies, it’s difficult to obtain regulatory approval because both companies play a heavy role as both hardware and software in the sector.
What then for Serato and AlphaTheta?
But, what happens next? Hopefully Serato’s justification for entering this transaction was n’t out of concern for being acquired. A lot of the time, a essentially sound but financially unstable company will get acquisition to provide their buyers and assets a good way out. Editors ‘ Update July 18: Serato has reached out to ensure that everything is running smoothly on their front:” Here’s a offer from the CEO:
While it’s not the choice we wanted, the Serato organization has never been in a better position, and neither has our relation with AlphaTheta. Through the process, we have n’t abandoned what we do best, and our network of upcoming innovations, including those involving jobs with AlphaTheta and other business partners, is incredibly strong.
Fresh Ly, CEO, Serato
There’s a possibility that the firm might attempt to relocate to a nation with less business regulation, but doing so would be a significant expense.
Considering Pioneer DJ / Alphatheta’s many years working closely with their large investment capital owners (KKR ) with deep pockets, we suspect that it’s probably a bit of a surprise to not get what they’re after. Maybe the alternative would be to have a very strong and healthy cooperation between the businesses. It’s difficult to speculate too much about the acquisition’s genuine purpose, but perhaps AlphaTheta has the chance to permit some of Serato’s team’s software prowess and incorporate it into their hardware offerings.
What do you think about the DJs benefitting from this offer constriction? Please leave a post below.