Siemens in the Re-Making: Breaking News

Holly Hosford-Dunn
October 24, 2014

Siemens’ plan to strip off Audiology was first reported by David Kirkwood as rumor in February and again as fact in May of this year.   Various types of stripping were dissected at Hearing Economics and by its many Commentators.  A few well-informed, anonymous sources offered their views.  It was all very exciting, as always, when Siemens shows up at the party.

The last and best words came several weeks ago in Amyn Amlani’s guest post, where he predicted increased supplier competition driving market growth if Siemens Audiology managed to re-invent itself as its own company.  That bright future may be upon us in the next few weeks.

Last Friday (October 17, 2014), three companies submitted sealed, binding bids for Siemens Audiology Solutions.  One was a  hearing aid manufacturer, GN Store Nord.  The other two bids came from European private equity firms you and I have probably never heard of, even though they could change our profession and industry.  Those companies are Permira Partners and EQT Partners.

As of writing, EQT is dubbed the frontrunner by Reuters and Bloomberg.  November 1 update:  The Siemens board is expected to accept EQT’s bid as early as Wednesday, November 5.  EQT’s bid is reported to meet Siemens’ full asking price of € 2.5B, about $3.13B in today’s US dollars.

EQT Partners — the Outside of a Big Onion


EQT Partners AB, a private Swedish company founded in 1994, has bought and sold over 100 companies, currently they have 66 in the US, Europe, Asia. In US dollars, it reports $27B in raised capital, revenues topping $31B, and 12% earnings growth (EBITDA) . It employs about 200 Industrial Advisors (over half of total employees) who provide strategic investment/divestment direction.

The group’s strategy is to purchase or finance medium to large sized companies over much of the globe (US, Europe, Asia), and grow them into leading and sustainable companies by infusions of industrial strategy. Its current portfolio of 66 companies includes four diverse companies in the US, which provide services for bulk liquid and gas storage; edible oil management; and sludge and biosolid treatments.

EQT Partners is big, but it is only a subsidiary of a much bigger player, the venerable Swedish industrial holding company Investor AB. Investor AB is a publicly traded company (INVEB:SS) founded in 1916. As of 2010, Investor AB controlled assets exceeding $30B (US) with reported profits of more than $4B (US).

At the core of this giant onion, Investor AB is one of 20 companies controlled by the Wallenberg family’s Foundation Asset Management AB. The Wallenberg family dates back to the 17th century in Sweden. In every generation since then, the low-profile family has led or influenced Sweden’s banking, political and diplomatic activities. In 1990, an estimated one-third of the country’s GDP was controlled “directly or indirectly” by the Wallenberg family.

And with that brief stab at due diligence, Hearing Economics feels safe in saying that liquidity will not be an issue if Siemens Audiology Solutions is acquired by EQT Partners.

Brave New and Bigger World Coming Up?


Confidential sources reported by Bloomberg paint this picture of current negotiations :

“A deal could be reached within the next few weeks … talks were still ongoing and could fall apart, leading Siemens to pursue an IPO.”

If EQT Partners does, indeed, do the deal in the next few weeks, then the Big 6 will be looking at changes that could catapult the industry into a Really Big 6.  That speculation is based on EQT Partner’s strategic goals and track record; also on one of its most recent acquisitions.

In August of 2012, Highbeam reported EQT’s purchase of UC4, “the world’s largest independent IT Process Automation software company,” which they renamed Automic. At the time, EQT partner Per Franzen commented that the acquisition goal was “to drive expansion into the rapidly growing Cloud Automation market.” At present, Automic’s vision is stated thus:

“Automic is reimagining how organizations integrate net generation service models such as cloud, DevOps and big data.”

And what, you ask, does this have to do with Siemens Audiology Solutions or hearing healthcare in general?  Plenty, if you’re thinking ahead as some companies are, maybe including EQT.

Current tools in the traditional hearing aid market are inadequate for predicting, innovating and guiding future growth to reach consumers.  That’s especially the case because consumer choices are changing as they weigh consumption of everything from PSAPs to Hearables to hearing aids, all available via Internet and other alternative distribution channels in addition to traditional dispensing venues.

Siemens Audiology Solutions may turn out to be an insider-turned-outsider that brings all the financial, technological, and strategic tools needed for technological disruption.  That disruption will integrate our products and service delivery into the larger world of consumers who demand ear-level devices for any number of reasons, including improved hearing.  Hearing Economics will talk more about this topic in the future.

Or Something Else?


If EQT Partners isn’t The One, then perhaps we can look to GN Store Nord, which has a long track record of innovative and expansionary acquisitions (e.g., Jabra headsets).  That could open up the Bigger World of hearing devices in other ways, which would also be fun and exciting.

If it’s Permira, then Hearing Economics must go back to due diligence and find out who and what Permira is.

If none of the above, then the Reuters article tells us Siemens’ original thoughts on an IPO or a spin-off to existing shareholders are still in play.

In the meantime, Hearing Economics wants to thank Siemens for providing so much to talk about in this space and in our profession.  What would we have done without Siemens and its friends these last 30 years?   Here’s hoping for another 30 years of excitement as Siemens Audiology Solutions comes through as the comeback kid.

  1. In my own estimable opinion, the big question is how much will the engineers of this new entity be able to lean on the thousands of engineers across the rest of the Siemens corporation, for things like ASIC (semiconductor) design & validation before tape-out, UHF digital & analog engineering for MFi/BLE, and advanced polymer engineering, including additive (3-D print) manufacturing.

    This access to “institutional knowledge” is priceless, which is why I’m surprised GN is the only industry insider to bid on it… And Cochlear Pty is not renewing their bid from several years ago.

    [Many years ago when I was a (very green) RCA engineer in the Government Communications Systems division, I had the luxury of over 400 engineers in the Camden NJ complex alone; and regardless of whatever esoteric problem I ran into, there was always an expert who could quickly recognize the problem, whether in my division or across the street in Commercial Broadcast… And if not, there were 1600 more engineers at Cherry Hill, Moorestown, East Windsor, & at the Princeton labs.]

Leave a Reply