(The author is a columnist for Reuters Breakingviews. The opinions expressed are their own.)
LONDON (Reuters Breakingviews) – The GN Store North of Denmark is placing an expensive bet on young people. The $ 9 billion retirement hearing aid maker announced on Wednesday https://www.gn.com/Newsroom/Announcement?id=2309255&lang=en&date=20211006&title=GN-Store-Nord-to-acquire-SteelSeries -a-global -pioneer-in-premium-software-enabled-gaming-gear, it used to shell out DKK 8 billion ($ 1.3 billion) for SteelSeries, making sophisticated headsets popular with younger gamers.
GN, listed in Copenhagen, could benefit from a boost. The company lowered revenue growth forecasts for its basic hearing aid unit on Tuesday, citing delays in product launches. Over the past year, shares have fallen behind Italian hearing aid retailer Amplifon, which announced strong sales growth targets last month.
GN’s appetite for the deal is clear. SteelSeries achieved 1.3 billion crowns of revenue in the first half of 2021, implying that its enterprise value is 3.1 times full-year sales. This is a significant premium for US competitors Corsair Gaming and Turtle Beach, which are trading in line with their estimated earnings this year, according to forecasts compiled by Refinitiv. GN is banking on technology and supply chain synergies to make up the difference, and with stocks rebounding 5% on Wednesday morning, investors appear ready to lend a sympathetic ear. (By Oliver Taslic)
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