* Amplifon to buy Gaes for EUR 528 mln
* Amplifon shares hit record high
* Amplifon to become No.1 player in Spain
* Deal expected to add to Amplifon EPS from 1st year (Adds share price, analyst comment)
By Thyagaraju Adinarayan
July 24 (Reuters) - Italian hearing aid maker Amplifon SpA has agreed to buy privately owned Gaes Group for 528 million euros ($616.6 million) in cash, in a bid to become the biggest player in Spain and also enter new markets.
The deal marks another step in the consolidation of a fragmented global market for hearing aids, where Amplifon competes with rivals such as Switzerland-based Sonova and William Demant from Denmark.
Shares in Amplifon rose more than 10 percent to a record high of 19.24 euros as of 0720 GMT.
Gaes, founded in 1949, is the largest remaining privately-owned speciality hearing aid retailer with a network of 600 points of sale, of which about 500 are in Spain -- the tenth largest hearing aid retail market in the world.
Amplifon said the deal was set to increase its global market share to over 11 percent and it expected synergies of about 20 million euros annually at core profit level by 2021.
Bernstein analysts said GAES has been available for sale for some time and that Amplifon is "likely best positioned out of the hearing aid players to extract value from the asset".
The deal also gives Amplifon access to Latin American markets.
"The deal is largely neutral for Demant and Sonova, though it does mean another large hearing aid retail asset is now off the table," Bernstein analysts wrote in a note.
The retail market for hearing aids is expected to grow as demand increases from ageing populations around the world. In its most recent annual report, Amplifon said the global retail hearing aids market had an estimated value of around 13.5 billion euros and was expected to grow by about 4 percent over the next few years.
The acquisition comes four months after Amplifon's Chief Executive, Enrico Vita, said they were targeting deals in Germany, France and Canada and had plans to enter the Chinese market by the end of the year.
Amplifon said it would finance the deal with a term loan from UniCredit.
The company is due to report second-quarter results on Thursday.
$1 = 0.8564 euros Reporting by Thyagaraju Adinarayan in Gdynia; Editing by Vyas Mohan, Subhranshu Sahu and Jane Merriman