Italian hearing aid manufacturer Amplifon is acquiring hearing care retailer Gaes Group for €528 million ($618 million), gaining a foothold in Spain, the tenth largest hearing aid retail market worldwide.
Gaes has more than 500 stores in Spain, with more than 20 in Portugal and about 70 in six Latin American countries: Argentina, Chile, Ecuador, Panama, Colombia and Mexico. Most of its revenue comes from its Spanish retail business, but the privately owned company also wholesales devices such as hearing aids and cochlear implants, and manufactures its own Microson hearing aid.
In 2017, Gaes put up €210 million in revenue, of which 87% came from Spain and 83% came from its hearing care retail business. It employs about 1,800 people.
The deal is slated to close in the fourth quarter and is expected to save the combined companies €20 million by 2021.
"The combination with GAES’ profitable business, the benefits of greater scale and the strong financial profile will enable us to successfully pursue our recently communicated development plans, thus creating tremendous new opportunities to drive growth," said Amplifon CEO Enrico Vita, in a statement.
“The deal is largely neutral for Demant and Sonova, though it does mean another large hearing aid retail asset is now off the table,” Bernstein analysts wrote in a note. Amplifon competes with Denmark-based William Demant and Switzerland's Sonova, both of which have operations in more than 30 countries and sell their products in more than 100 countries.
It isn't just Amplifon that's angling for new markets. In August last year, Demant said it would start making over-the-counter hearing devices if demand for them spiked in the U.S. The company's comments came after the U.S. Senate approved a bill that, among other things, would allow hearing aids to be sold over the counter.
"I do not expect any significant change in the U.S. market, but should sales of products like these become substantial, … we will produce some as well,” CEO Soren Nielsen said to Reuters at the time.