A takeover would complement a long-standing supply partnership between the 2 companies and give William Demant a more direct retail link to customers.
It comes after William Demant, the world’s 2nd-largest hearing aid maker, was ousted by larger rival Sonova Holding AG (SIX:SOON) as a product supplier to Costco (NSDQ:COST) stores in the United States.
William Demant said in a statement it has entered into exclusive negotiations to buy a 53.9% stake in Audika held by controlling shareholder Holton SAS at a price of €17.78 euros per share.
Audika shares surged almost 28% to €17.25 while William Demant rose 0.9% to 495.40 DKK.
If successful, William Demant would start a mandatory public tender offer under French regulations for the remaining 46.1% of the outstanding share capital of Audika.
Headquartered in Paris, Audika has more than 460 retail outlets across France and another six in Belgium. In 2014, Audika recorded revenue of €98.7 million.
Analyst Michael Friis Jorgensen from Alm Brand Markets said the deal looked like a defensive move.
"They don’t want to lose the sales through Audika’s stores but the deal could put a stop to their expected share buyback programme," Jorgensen said.
William Demant’s advisers on this transaction are Moelis & Co. and Latham & Watkins. ($1 = €0.8806)