Kiwi investors net $584 million from sale of Australian audiology business

Peter Hutson and James Reeves, pictured in 2014, have sold their Australian audiology business to Italian group Amplifon for $584m. Photo / Sarah Ivey

Bay Audio, a chain of audiologists founded by two Kiwi entrepreneurs, has been sold for A$550 million ($584m) to Amplifon, the world's largest hearing aid retailer.

The company, which has around 100 retail outlets in shopping malls in Australia, was founded in 2007 and initially run as a joint venture between Peter and Anya Hutson with Abano Healthcare.

In 2009 the New Zealand arm of the business, Bay Audiology was sold to focus on expansion in Australia. The New Zealand business was later sold to Amplifon, which is headquartered in Milan, Italy, in 2010 for $157.8m.

Amplifon has now acquired the Australian business.

"I am delighted that Bay Audio finds a new home in the Amplifon Group and is reunited with the Bay Audiology business in New Zealand. Both Bay Audio and Amplifon are best in class retailers with an extraordinary focus on customer experience and people development," Peter Hutson said in a statement.

"I am confident that inside Amplifon Bay Audio will expand the legacy we have built and continue to accelerate its growth trajectory."

Hutson added: "We are proud to have developed a truly innovative world leading business with the help of some great people and to have done it twice."

The relationship between the Hutsons and Abano soured when the Hutsons teamed up with Archer Capital for a hostile takeover bid, which failed.

In 2016 Abano said it had received an unsolicited offer from an unnamed "international hearing device manufacturer" for more than the roughly $11m it was valued on its books.

Eventually the Hutsons exercised their preemptive right to buy Abano's shareholding. This saw the Hutsons pay $32m for the 50 per cent of Bay audio shares they did not already own.

Bay Audio was also part-owned by New Zealand investor James Reeves.

Abano was eventually taken over by Australia-based private equity firm, BGH Capital and the Ontario Teachers' Pension Plan Board for $5.70 per share, valuing Abano at $149.8 million, through a scheme of arrangement.

The price was well below the $9.84 a share partial offer from Hutson and Reeves that was rejected in 2017.

Amplifon said it would finance the acquisition with available cash.

"This major acquisition represents another key milestone in the history of our company and perfectly fits our growth model and M&A strategy," Amplifon chief executive Enrico Vita said in a statement.

"Moreover, this deal will enable us to build another company stronghold, further strengthening our position in the Australian retail market, the tenth largest in the world."