Bottom line: In its bid to become a $100 million business, Turtle Beach has decided to buy out PC accessory maker Roccat. The headset giant wants to further its hold in the PC headset market as well as expand into the equally lucrative mouse/keyboard sector.
Gaming headset maker Turtle Beach announced Thursday it is purchasing PC peripheral company Roccat for $19.3 million in cash, stock, and earn-out payments.
German company Roccat primarily produces gaming accessories including mice, keyboards, and even headsets. Turtle Beach is not looking to buy out the competition, but instead, add additional products to its lineup.
The San Diego-based company is currently looking to expand its footprint in the lucrative PC gaming market. Since Roccat is already a strong brand in Germany and Asia, adding its mice, keyboards, and a secondary line of headsets to its stable will help Turtle Beach achieve its goal especially in those territories. It will also oversee distribution of the Roccat brand in the US and other parts of Europe.
"This is a dynamic and strategically important deal for Turtle Beach," said CEO Jurgen Stark. "We are adding a complementary portfolio of PC gaming mice and keyboards, a skilled PC accessories team, and a highly synergistic distribution footprint."
The $19.3 million price point breaks down to $14.8 million in cash (net of working capital adjustment), $1 million in stock or cash (company option), and approximately $3.4 million in earn-out payments. The acquisition is expected to be completed by Q2 2019 and will add approximately $20-$24 million to Turtle Beach's 2019 revenue. Moreover, the company expects Roccat products to contribute an additional $30 million in 2020. In turn, the merger is expected to significantly boost TB share prices starting in 2020.
Turtle Beach does not plan on rebranding Roccat products, but rather use its existing name and reputation to expand itself into a $100 million gaming accessory company.
"Roccat accelerates our expansion into the roughly $1.6 billion PC gaming headset market, as well as directly enables us to address the roughly $1.3 billion PC gaming keyboard and mice market," Stark continued.
Roccat is also excited about better serving the console market through TB's existing presence. Turtle Beach is already well-known for high-end headsets for Xbox and PlayStation. Roccat's CEO René Korte believes it can tap that market further than it has with TB's help.
"We've long admired how Turtle Beach's pioneering headsets have elevated gaming, and it is an honor to join forces and bring our great products to more gamers," said Korte. "I have no doubt that combining Roccat's strength in the PC peripherals market with Turtle Beach's 45 years of experience, impressive technology, console dominance, and strong brand will bring even more victories to gamers around the world."