Turtle Beach Corporation announces strategic acquisitions and executive appointments

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In a significant move to bolster its market presence, Turtle Beach Corporation (Nasdaq: HEAR), a prominent player in the gaming accessories domain, has announced a series of strategic decisions following the establishment of a Value Enhancement Committee in 2023. The Board of Directors has sanctioned comprehensive changes aimed at enhancing business value, optimizing capital allocation, and restructuring senior leadership.

Acquisition of PDP and Financial Outlook

Turtle Beach has executed definitive agreements to acquire PDP, a top-tier gaming accessories provider, for an enterprise value of $118 million. This acquisition is expected to substantially increase Turtle Beach’s market size by integrating PDP’s leading gaming controller category, which is anticipated to generate total revenues between $390 to $410 million and an Adjusted EBITDA of $22 to $28 million in the first full 12 months post-acquisition (Q2 2024 through Q1 2025).

The company projects $10 to $12 million in annual run-rate cost synergies from the transaction, with potential for additional revenue synergies and cost savings over time. Diversis Capital, PDP’s majority owner, will become Turtle Beach’s largest shareholder, holding approximately 16% of the pro forma basic shares outstanding. The consideration for the transaction includes the issuance of 3.45 million shares of Turtle Beach’s common stock and approximately $79.9 million in cash.

2024 Summary Financial Outlook

Turtle Beach has expressed satisfaction with its market share gains during the holiday season and its ongoing cost improvement initiatives. The company’s 2024 net revenues are expected to range from $370 million to $380 million, driven primarily by the PDP acquisition. The pro forma combined Adjusted EBITDA is forecasted to be between $51 million and $54 million, incorporating about 9 months of PDP’s operations.

Modified Dutch Auction Tender Offer

To further enhance shareholder value, Turtle Beach intends to launch a modified Dutch Auction Tender Offer to purchase up to $30 million in value of its common stock. The offer price per share will range from $13.75 to $15.00, representing a premium over the recent closing share price. The Tender Offer is set to commence around April 10, 2024, and is expected to conclude by May 10, 2024.

Leadership Transition

The Board has appointed Cris Keirn as the new Chief Executive Officer, effective immediately. Keirn, who joined Turtle Beach in 2013, has been instrumental in transforming the company’s product portfolios and has held various leadership roles at Motorola. His appointment marks the culmination of a comprehensive CEO search initiated in the second quarter of 2023.

Terry Jimenez, Chairman of the Board and Chairman of the Value Enhancement Committee, expressed confidence in the strategic decisions, emphasizing that the acquisition of PDP, the tender offer, and Keirn’s appointment as CEO are poised to create substantial value for Turtle Beach shareholders.

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