Logitech International could make much bigger deals than it has before to accelerate growth in areas such as controllers for players of blockbuster computer games like Fortnite, Chief Executive Bracken Darrell said on Wednesday. "It is possible we could do a larger deal. I wouldn't put a number on it, but it certainly could be that size," Darrell told Reuters when asked if Logitech could pay $1 billion to $2 billion for an acquisition.
"If you asked me five years ago would we look at anything large, I would have said no. If you roll forward we have done a lot of acquisitions and have tended to be quite good at them. "We have got into a position where I feel we could handle it, if the right thing became available and it was larger."
Last November Logitech ended discussions to acquire Plantronics Inc, a US maker of Bluetooth earpieces and gaming headsets. The mooted $3 billion deal would have been by far Logitech's largest acquisition. Darrell declined to comment on why the deal fell through, although a source close to the company said at the time that price disagreements were the reason.
Logitech would look at deals to accelerate in fast-growing areas or acquire technology, Darrell said. The company's $85 million purchase of headset-maker Astro Gaming in 2017 helped boost sales to gamers playing Fortnite, Chief Financial Officer Vincent Pilette said at the company's investor day in Zurich.
M&A was the number one priority for the company's capital allocation, he said. He was speaking after Logitech raised its long-term profit targets, sending its stock to the highest level since November. In the next three to five years Logitech believes its gaming category - which produces ultra-fast keyboards, mice and headsets for games like Fortnite and Apex Legends - could increase its annual sales to more than $1 billion from around $650 million at present.
Its content and productivity unit can increase its sales to $1.5 billion from $1.2 billion presently, while video collaboration - conferencing devices - could increase to more than $1 billion from roughly $300 million at present. Darrell said these categories were benefiting from long-term trends and were resistant to macro-economic downturns.
"In a down environment people are going to cut their travel budgets, so video will go up. In gaming, in a down environment people don't want to go out so much and spend as much money, so they will probably play more games. "Nothing is recession proof, but these categories are recession resistant." Logitech would look at entering new product categories, he said, but there were no plans to ditch weaker performing areas like its remote controls or mobile speaker businesses.
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