ZURICH Swiss hearing aid maker Sonova (SOON.S) is buying Dutch-based AudioNova for 830 million euros ($953 million), its largest acquisition, to expand a network of European stores where it will jettison rivals' products in favor of its own.
The cash deal to buy AudioNova from Curacao-based investment company HAL Holding N.V. will add 1,300 stores in eight countries. That more than doubles Sonova's presence in Europe and boosts its worldwide store total to more than 3,300.
AudioNova now sells more than 300,000 hearing aids a year from different providers in eight European countries. Sonova products -- its brands include Unitron and Phonak -- account for about 25 percent of that figure.
The move increases competition with Danish rival William Demant Holdings (WDH.CO) which has also been buying retailers, including a move last year in France to snap up Audika.
Over the next two years, Sonova Chief Executive Lukas Braunschweiler said he plans to boost Sonova's share of AudioNova's sales to about 95 percent.
It is not uncommon for hearing aid retailers to switch between brands, Braunschweiler said, so he did not fear a customer backlash by swapping out rival products.
"Usually we bring share of wallet in our own retail chains up to about 95 percent of own products, that's the rule after two years, and we have about 5 percent other products left," he said.
Sonova shares gained 4 percent after the deal was announced.
William Demant Chief Executive Niels Jacobsen told Reuters that he saw opportunities to win business at retailers which currently carry Sonova products but will in future face competition from the Swiss company's new AudioNova locations.
William Demant had looked at AudioNova as a potential acquisition, but Jacobsen declined to say if it was one of the bidders.
Braunschweiler said Sonova won an auction run by ABN Amro, which advised HAL Holding, in which there were six bidders in the final stages, including three financial bidders and three strategic investors, including Sonova.
"It was a competitive race," said Braunschweiler, whose company's advisory team included Credit Suisse (CSGN.S).
AudioNova is expected to generate 2016 sales of approximately 360 million euros and an EBITDA margin of around 16 percent, Sonova said, adding the acquisition will lift earnings per share starting in the financial year 2017/2018.
Sonova lifted sales last year by 4 percent to just over 2 billion Swiss francs ($2.1 billion).
($1 = 0.8705 euros)
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(This story has been refiled to clarify the ninth paragraph)
(Reporting by John Miller; Editing by Michael Shields and Keith Weir)