Bang & Olufsen

Regulatory Filings • Mar 18, 2016

Strategic partnership with LG Electronics Inc (”LG”)

As previously announced, Bang & Olufsen a/s ("Bang & Olufsen") initiated a
review to identify strategic and structural options to increase scale and
further reduce complexity within Bang & Olufsen.

As a result of this review, Bang & Olufsen has entered a strategic technology
partnership with LG, one of the world’s largest producers of TVs and a
technological frontrunner with its leading OLED technology and WebOS. The
agreement entails that Bang & Olufsen will focus on its unique competencies
within design, acoustics and smart home integration within TV development, and
combine this with LG’s technological leadership within OLED technology.

“This partnership with LG will enable Bang & Olufsen to stay at the forefront
of innovation in the TV category, a category which is currently undergoing
significant change and which is very important to Bang & Olufsen. The
partnership will address Bang & Olufsen’s key challenges related to scale and
complexity”, says CEO Tue Mantoni.

The partnership will help solve a key strategic challenge as Bang & Olufsen
will achieve technological capabilities and scale needed to improve the
long-term profitability of the company. The partnership will allow Bang &
Olufsen to focus on core competencies within acoustics and design, while
further optimising the company’s supply chain, development, production and
service.

The first OLED TV produced by LG for Bang & Olufsen as a result of the
partnership is expected to be launched in 2017. Further, the partnership
involves collaboration in other areas such as license and product bundle
activities.

As a consequence of the partnership, Bang & Olufsen expects to improve gross
margins and reduce capacity costs. The agreement has an annual savings
potential of DKK 150-200m when fully implemented over the next three years. As
such, the partnership is an important step towards achieving the financial
targets set out for 2017/18 of an EBIT-margin of approximately 7 per cent and a
positive free cash flow.

As a result of the partnership Bang & Olufsen expects to realize restructuring
costs of DKK 10 to 15 million, of which up to DKK 5 million will be realized in
the fourth quarter of 2015/16. The restructuring costs have not been included
in the current outlook for the 2015/16 financial year.

Dialogue regarding a potential launch of a takeover offer

In continuation of company announcement no. 15.07 dated 26 November 2015, Bang
& Olufsen can inform that a dialogue is ongoing with one potential offeror that
may or may not lead to an offer for the whole or part of the issued share
capital of Bang & Olufsen.

At present, Bang & Olufsen has not entered into any binding commitments, and
uncertainty remains as to the outcome of the dialogue with the potential
offeror.

Ole Andersen Tue
Mantoni

Chairman of the Board CEO

For further information, please contact:

Investors: Claus Højmark Jensen, tel: +45 9684 1251

Press: Jan Helleskov, tel: +45 5164 5375