COPENHAGEN - Bang and Olufsen, the Danish maker of upmarket sound systems and televisions, said on Friday it had entered a partnership with LG Electronics to outsource its production of televisions.
The struggling Danish firm, which said in November it was in talks with a potential buyer, said the deal "will address Bang and Olufsen's key challenges related to scale and complexity".
It would enable the group "to stay at the forefront of innovation in the TV category, a category which is currently undergoing significant change," chief executive Tue Mantoni said in a statement.
The group, which also makes sleekly designed speakers, soundsystems and headphones, said it would now focus on its core know-how in design and acoustics.
The move would result in annual savings of between 150 and 200 million kroner ($23 million-$30 million, 20-27 million euros), it said.
The partnership's first TV using organic light-emitting diode (OLED) displays -- screens that deliver a more vivid picture quality and consume less electricity -- is expected to be launched next year.
In February, South Korean LG unveiled its first modular smartphone, the G5, which came with a sound system developed by Bang and Olufsen.
Shares in the Danish company soared in November after it said it was in talks over a potential takeover offer.
On Friday it said that the talks were continuing but that no binding offer had been made.
Founded in 1925, the Copenhagen-based company has posted annual losses over the past three fiscal years as more people listen to music on their mobile devices and after failing to attract younger consumers.