Sivantos and Widex in €7-billion merger
Germany, Denmark hearing-aid makers form the world's third-largest supplier
16 May, 2018
Photo: Sivantos website
The merger aims to accelerate growth, strengthen market penetration and enhance efficiencies, the companies said.
Hearing-aid makers Widex and Sivantos agreed to merge on 16 May to form the world's third-largest supplier behind market leaders Sonova and William Demant. Germany's Sivantos, formerly known as Siemens Audiology, and Denmark's Widex will create a company worth more than €7bn ($8.28bn), including some €3bn in debt.
Makers of hearing aids, whose customers are typically in their seventies or eighties, are benefiting from rising demand in aging societies, but some are facing challenges adapting to the digital age and the demands of more tech-savvy generations.
“Innovation is one of the biggest areas of growth, and this is accelerating because we have a new group of consumers that is coming with a completely different mindset,” Sivantos CEO Ignacio Martinez told Reuters. The merger would enable the company to invest more in research and development, he said.
Swedish private equity firm EQT will own a majority of the merged group in which the Topholm and Westermann families, who currently own Widex, will retain large stakes. EQT bought Sivantos from Siemens in 2015 for more than €2bn. The companies declined to comment on the relative valuation or to disclose the distribution of stakes. The deal was branded a “merger of equals”, indicating that no cash was involved.
The combined group, whose name has not been decided, will have €1.6bn in sales and employ more than 10,000 people worldwide, including 800 in R&D.
The merger pushes back EQT's plans for a stock market listing of Sivantos by a few years, as the focus will now be on integrating the companies and advancing their digital technology, a person close to the matter said.
“It is very possible that there will be an IPO, but the only thing we know is that we will continue to be a large shareholder,” Widex chairman Jan Topholm told Reuters.
Sonova has been criticised for missing an opportunity when GN Store introduced direct-streaming hearing aids for wireless devices in 2014, but last year closed that gap.
Sivantos and Widex also have similar technologies. The merger therefore aims to accelerate growth, strengthen market penetration and enhance efficiencies. This will allow the expansion and increased access to hearing healthcare via a dedicated salesforce, providing innovative solutions across a wide range of hearing needs, enabling people to continue leading better lives.
“The idea is to create a game changer for the future of hearing. Combining these two innovative companies will change the hearing experience for people with hearing loss across the world,” explained Marcus Brennecke, partner at EQT Partners.
Analysts said that increasing R&D spend may allow Sivantos and Widex to draw ahead of peers and that the new entity may be happy to experiment with new channels and approaches to market.
Sydbank analyst Morten Imsgard said Sonova, William Demant and the newly formed company would each have an around 25% market share, followed by GN Store with 16% and Starkey with 9%.