 Australian cochlear implant maker Cochlear Ltd. and Switzerland's Synthes Inc. have emerged as the front runners for Siemens AG's hearing aid unit Siemens Hearing Instruments (SAT) ahead of binding bids due on 22 February, newspapers reported yesterday.
The deal is expected to be in the range of more than 2 billion euros. The two companies are joining hands with a slew of private equity firms such as private equity firm Hellman & Friedman and asset manager Kohlberg Kravis Robert (KKR) for the German company, which sells one in four of the world's hearing aids. Cochlear dominates the market for bone-anchored hearing systems, which unlike conventional hearing aids are implanted surgically in the bone behind the ear. If the deal goes ahead, Cochlear would increase its market capitalisation from $3.7 billion to around $9 billion, and would need to raise significant capital. Siemens wants to get spin off the unit as it plans to focus on its core areas. The unit was projected to make earnings before interest, taxes, depreciation and amortization (EBITDA) of some 170 million euros in 2010. Siemens is also seeking a new majority owner for Gigaset, its former telephone unit now owned 80 per cent by Arques. According to some reports, some other buyout firms such as Bain Capital, Cinven, and Permira are also each working on separate bids for the unit. The Australian newspaper reported that Cochlear refused to comment on the report, but a market release is likely today as change in share price is expected to result in a query from the Australian Securities Exchange (ASX). Cochlear shares ended the session 1.8 per cent stronger at $66.58, compared to a 0.7 per cent drop on the benchmark index. Analysts are unsure of whether the deal would go ahead, as it would represent a backwards step for the company technologically, reported The Australian. "Cochlear enjoy a unique position in the medical technology sector - they've built a niche that is virtually unassailable, so why would they go back and buy old technology that has been around for decades?" one analyst said. (by domain-b.com)
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