GN CEO Peter Karlströmer on GN-Amplifon Deal: “We’re Creating an Even Stronger Company”

Amplifon’s planned acquisition of GN Hearing came as a surprise to many in the hearing industry, and it has the potential to redraw the map of hearing healthcare. The $2.6 billion deal announced in March would bring ReSound, Beltone, Jabra Enhance, Interton, Danavox/Danalogic, and GN Hearing’s related R&D, manufacturing, operations, and intellectual property into the fold of Amplifon, one of the world’s largest pure-play hearing care retailers.

The deal would mark a strategic shift for GN, which would exit the hearing healthcare business and focus on its Jabra enterprise communications and SteelSeries gaming businesses, while retaining a significant equity stake in Amplifon. For Amplifon—a company that has traditionally spurned manufacturing—the deal would mark a major move into integrated hearing healthcare.

To better understand what the acquisition could mean for consumers, clinicians, independent providers, and the ReSound, Beltone, and Jabra Enhance brands, HearingTracker spoke with GN Group CEO Peter Karlströmer.

The following conversation has been edited for length and clarity.

HearingTracker: What do you see as the principal reasons for the GN-Amplifon deal, and how did it come about?

Peter Karlströmer:  GN Group is very proud of the hearing aid business. It has been a core part of the group for a long time. In addition to hearing aids, we have had our enterprise communications business with the Jabra brand, and more recently, the consumer electronics and gaming business with SteelSeries.

Over the last few years, we have increasingly focused on realizing the benefits of the different pieces of GN and how they can contribute to each other, particularly in innovation, through our One GN initiative.

Just looking at the hearing aid side, we feel very good about the innovations we have made. We have brought to market successful products like ReSound Vivia and Beltone Envision, and revenue has been growing.

But even more important to me is that the number of users of our products has been increasing. That is often the best recognition you can get; it tells you that you are doing the right things. So, we are definitely not doing this because of a lack of innovation or belief in the business. We feel very good about the trajectory we have been on, and in many ways, we have had strong momentum.

GN takes pride in being a leading hearing aid innovator and in striving to understand our users and patients, their challenges, and how we can help. We know the technology well and are an exceptional developer and manufacturer of hearing aids.

Amplifon, of course, is one of the largest global hearing aid retailers, with more than 10,000 clinics and sales outlets. Perhaps even more important, in every one of those locations, there is an audiologist or hearing care professional who truly understands how to help patients and sees patients every day.

That kind of insight and data—together with our strengths—can help innovate products and services even better and faster. Given this, I also think we have been fairly paid for what we are selling, so it makes sense from our shareholders’ point of view. But the primary reason is that we think we are creating an even stronger GN.

HearingTracker: The deal also helps GN reduce debt and reposition around its other audio businesses. How much did that factor into the decision?

Karlströmer: We have had too much debt for a relatively long time, and we have been working that debt down. However, debt is not the reason for doing this; we could very well have addressed the debt situation over the next few years through the company’s operations.

That said, this transaction does allow us to give full attention to growing our other businesses, where we also see many opportunities. We can double down there a bit more.

HearingTracker: Some long-time industry observers were surprised GN did not end up with another hearing aid manufacturer, such as Demant, which is headquartered just down the road from Ballerup. Why Amplifon?

Karlströmer: We have great respect for all our peers in the industry, including Demant. Our board has, of course, considered all possibilities and alternatives and concluded that this is most advantageous. For the reasons I mentioned earlier, it’s a very good match, bringing together two highly complementary businesses, with basically no overlap.

HearingTracker: Do you see any possible obstacles to finalizing the agreement, such as regulatory friction, competition authorities, or another bidder?

Karlströmer: The transaction, of course, is subject to regulatory approvals. And that’s the most important thing at this moment.

We believe this is fundamentally a vertical integration that will benefit consumers and drive innovation, and we look forward to engaging constructively with regulators as the process runs its course.

HearingTracker: In practical terms, what do you think the deal could mean for the hearing industry and for clinicians?

Karlströmer: I have very high hopes that the acquisition will improve both technology and services for clinicians. Of course, [Amplifon] is best placed to answer this question.

But my view is that, if this is done well, [the GN Hearing division] will be an even stronger innovator. The depth of clinical experience and data represents a significant opportunity for long-term product development, though how that is structured will naturally be for Amplifon to determine post-closing.

What I personally care a lot about is that we will continue to serve all the great partners we have—from larger customers to smaller independent practices. My understanding is that this is very much what Amplifon would like to do, and they have communicated this also.

We understand this is a big change. In particular, audiologists and hearing care professionals working with us might have some questions. I cannot speak on behalf of Amplifon, but I know they share our exact same vision, and I can say that all the great people in GN who work with them today are very eager to continue working with them and serving them as they are now. That is our intent, and I know that Amplifon is fully committed to this identical path.

HearingTracker: For current ReSound and Beltone hearing aid wearers, what should they expect? Will anything change with products, apps, fitting software, service, or support?

Karlströmer: I don’t think users should expect a lot of change in the near term. It takes a while to develop a hearing aid, and we have exciting news coming up later this year. All innovations within hardware and software will happen as planned.

So, I don’t think there will be any disruption or change in the way consumers have come to know us. If you look 3 to 5 years ahead, that is where I hope we can do even better and perhaps solve problems that are not fully solved today. Again, this will be for Amplifon to determine.

HearingTracker: GN has been through a difficult failed hearing acquisition before, when Phonak’s attempted purchase of GN ReSound was blocked in 2007. At that time, GN lost some ground in R&D and product development. Is there any threat of a lag in technology development while this deal is finalized?

Karlströmer: I am not really worried about that specific issue. In this case, it’s important to reflect on the fact that this is a vertical integration. Amplifon does not have a competing platform or competing R&D, unlike the Phonak deal. We are, in the end, the hearing aids, so to speak.

So I don’t think there is any risk for that. We are very committed to successfully launching what we have in the pipeline.

I need to caveat that, after we close, this becomes Amplifon’s decision, of course; they’re the ultimate decision-maker in this respect. But from my understanding of our discussions, they would, if anything, like to double down on innovation and make it even stronger. Technical innovation is part of the reason they’re acquiring GN Hearing.

HearingTracker: There is a checkered past of hearing aid manufacturers buying and operating dispensing networks. This deal raises the reverse question: Can a retailer effectively become a manufacturer?

Karlströmer: It is a fair question. Amplifon has paid close attention to our key talent on the hearing aid side throughout this process. They will be really taking over the whole team: on the R&D side, on the leadership side, on the sales side, and in the regions around the world.

I believe they will be paying close attention to caring for employees and creating an environment where these people can continue to drive the business. I have heard Amplifon CEO Enrico Vita say there will be a center for retail in Milan and a center for hearing aids in Denmark. So, while I think there will be inevitable changes, there will also be a lot of continuity. It’s not like things will be turned upside down.

I think, in a very positive way, they respect a lot of what has been achieved at GN over the last few years. They would like to see that continue. Taking care of people is the way you do that.

HearingTracker: GN recently opened a major North American headquarters and manufacturing/distribution facility in Shakopee, Minnesota. How will the separation work at sites like that?

Karlströmer: We will go through these types of questions over the next few months. However, as far as the hearing division is concerned, this vertical integration is designed to create synergies with minimal overlap between our operations.

HearingTracker: GN has spent the last several years emphasizing its “One GN” strategy. Did that complicate the separation?

Karlströmer: One GN has really been part of our success over the last few years. It has helped us on the hearing aid side, both in terms of innovation and also for operations, such as quality and manufacturing. We learned a lot.

We were on a good trajectory operating under the One GN umbrella, and we could have continued to do that well. But if you take a longer-term perspective, I think this will be even better. Much of what we have learned and the improvements we have made over the last few years will remain in both organizations. In other words, these are lasting improvements.

HearingTracker: From a business culture standpoint, GN’s roots in hearing healthcare go back to the 1940s. Does it feel strange to separate from that identity?

Karlströmer: You are right. GN has a strong identity, but there have always been some people leaning more toward hearing, some toward enterprise, some toward gaming, and so on. We still need to pay attention to details to do it well.

I think it is more the cultural aspect. We have identified as being in the same company, and now we will not be. I know for myself and most employees, there will be a lot of friendships and bonds that will last, because these are strong relationships between people. That’s the emotional component. But I think we will manage this in a positive way. And business-wise, we think it makes a lot of sense.

HearingTracker: In the U.S. market, Beltone and Miracle-Ear have historically been tough competitors. Amplifon has said it intends to preserve GN Hearing’s brands. From your perspective, how do you see these brands maintaining their separate identities?

Karlströmer: Again, this is more of a question for Amplifon, but my opinion is that Beltone has been a great brand for such a long time. I believe the Amplifon team knows and respects that. And it is not only a brand; it is owners, families, and sometimes generations that have been committed to these businesses through the years.

But GN has multiple brands, as you know. In many countries, this has always been managed with a healthy level of separation and differentiation.

HearingTracker: Jabra Enhance is especially tricky because GN is keeping the broader Enterprise business. Do you see the Jabra Enhance brand being used in OTC and Costco channels?

Karlströmer: We are very open to that. Then, of course, I think it becomes a discussion with the larger customers about what they prefer.

HearingTracker: What would define success for both companies three to five years after the deal is finalized?

Karlströmer: If the transaction is approved, success for the hearing aid business would mean ensuring that innovation continues to accelerate and that customers around the world are well served while benefiting from the integration. That, for me, is success.

For the rest of GN, that could be a long interview in itself. There is so much happening with how AI is changing the way we work in companies. With Jabra, we are a leading company in enterprise collaboration, and we would really like to help companies move into this new way of working—from hybrid work and remote work to completely new ways of working with AI agents, computers, and offices.

And then I would also highlight the gaming business. SteelSeries is very appreciated by gamers. There are more and more gamers of all kinds. The average gamer age is well into their 30s, and there is a growing cohort of gamers who are 50-plus and 60-plus. Also, of all new gamers, about half are women. Gaming is becoming a broad phenomenon, and we have an exciting platform to build from.

HearingTracker: GN will also have a sizable stake in Amplifon, so you will have a continuing interest in Amplifon’s success, right?

Karlströmer: Absolutely. You highlight something important here: we very much believe in the value-creation of what the two companies are doing here together. As such, we were willing to take part of the transaction price in Amplifon shares. So, if we do this well together, there will be benefits for GN shareholders as well.

And this also directly relates to how important it is that we continue to care for all our customers. That is what our team is working on day and night, now and into the future.