March 16 (Reuters) - GN Store Nord has agreed to sell its Hearing business to Italy's Amplifon for 17 billion Danish crowns ($2.6 billion) on a cash-free and debt-free basis, the Danish hearing aid
Italy's Amplifon to buy hearing device maker GN Hearing for $2.6 billion
Amplifon's Strategic Acquisition of GN Hearing
By Elisa Anzolin and Elvira Pollina
Deal Overview and Industry Context
MILAN, March 16 (Reuters) - Italian hearing aid company Amplifon has agreed to buy the hearing business of Denmark's GN Store Nord for 2.3 billion euros ($2.6 billion), in a deal that will create a group spanning both manufacturing and retail distribution, the two companies said on Monday.
The move comes at a time when the hearing aids industry is under pressure due to slowing sales and rapid technology development.
Amplifon's Expansion and Market Impact
Retail to Wholesale Transition
Amplifon, which operates more than 10,000 stores in 25 countries and has long focused on a retail‑only model, said the acquisition of GN Hearing will also help to expand its business in the U.S., the biggest hearing aid market.
CEO Enrico Vita told analysts the deal would give the company, in line with its competitors, a presence in the wholesale segment and greater control over the value chain, from research and development through to sales to end‑customers.
Financial Implications
Earnings and Share Performance
Amplifon expects the cash-and-share deal will add up to 80 million euros to the company's core earnings within three years, mostly driven by insourcing of the ear-making equipment, with GN becoming the main provider.
Shares in Milan-listed Amplifon, which has lost around 50% of its value in the last year, fell by as much as 12% on Monday, with an analyst pointing to the high price paid. GN's shares were 35% up during morning trade.
Deal Structure and Financing
Under the agreement, GN will receive 1.69 billion euros in cash and 56 million Amplifon shares, equivalent to about 16% of the enlarged group, which will have combined revenues of around 3.3 billion euros.
The Danish group, which will now focus on audio and video peripherals, will have the right to appoint a representative on the Amplifon board.
Amplifon has committed to a bridge loan to fund the cash component and it aims to finance it with a mix of debt and equity instruments, with Amplifon shareholders injecting up to 750 million euros.
Outlook and Completion Timeline
The deal is expected to be completed by the end of the year.
($1 = 0.8750 euros)
(Reporting by Elvira Pollina and Elisa Anzolin in Milan and Elviira Luoma in Gdansk, editing by Milla Nissi-Prussak, Gavin Jones and Keith Weir)
