Reports spread that Siemens plans to put its hearing aid division on the block

By David H. Kirkwood

ERLANGEN, GERMANY—More than three years after Siemens tried to sell its hearing aid division but failed to attract an acceptable bid, reports on The Wall Street Journal’s Market Watch web site and elsewhere online say that the German industrial giant is planning to try again later this year. The reports cite unnamed informed sources.

Siemens has declined to comment on the reports, just as it did in 2009, when the company first shopped its Erlangen-based Siemens Audiologische Technik GMBH. Alina Urdaneta, vice-president of marketing for Siemens Hearing Instruments, Inc., in Piscataway, NJ, told Hearing News Watch this week that the company’s policy is not to comment on such rumors. She added, “There is always speculation of this sort in the media.”

Three years ago, when Siemens was interested in selling its hearing aid division, a number of suitors emerged. However, none of their bids came close to the $2 billion Euro (about $2.7 billion) price that the company was reportedly asking, so Siemens decided to remain in the hearing aid business.

 

CIRCUMSTANCES HAVE CHANGED

If Siemens–whose $113 billion in annual sales revenues place it 47th on Fortune’s list of the 500 largest global companies–does want to divest itself of Siemens Audiologische, conditions for a sale may be better than they were last time it tried.

For one thing, since its earlier effort failed, Siemens has invested substantially in expanding its range of hearing products and improving their quality. One of its successes has been the Aquaris, a waterproof hearing aid introduced in 2011 that can be safely worn in the shower or in the swimming pool. It garnered favorable attention last month in Gadgetwise, a New York Times blog.

Another factor that may prove beneficial to Siemens is a change in the European regulatory landscape that occurred shortly after its unsuccessful attempt. In April 2010, the German Federal Supreme Court overturned a ruling by the German Federal Cartel Office that had prevented Sonova, parent company of Phonak, from purchasing ReSound from its parent company, GN Store Nord, for more than $2.6 billion.

The Cartel Office contended that the merger of two of the world’s six major hearing aid manufacturers would create an illegal oligopoly. That may have discouraged companies such as Sonova and William Demant, Oticon’s parent company, from trying to acquire the Siemens hearing aid unit in 2009.

Now, however, in light of the German high court’s overrule of the cartel office, a Big Six company might be emboldened to bid for Siemens.

Stay tuned for further developments.


9 Comments

  1. Many of the comments refer to the US market. The European market is entirely different, and this probably has quite a considerable effect on decisions about the future of the market.

  2. Watch for Cochlear Pty to make a bid again, if they can put together the financing: They know they are in trouble with their processors when Sonova bought Advanced Bionics in 2010; and with AB’s announcement of a new “Phonak” speech processor a few weeks ago, Cochlear responded with a “vaporware” announcement of their own.
    Basically, Cochlear needs the technology one of the Big Six’ can supply to compete with Sonova; and Siemens coming on the block will give them what they desperately need.

  3. Why doesn’t Costco just make it official and buy them out…? I’m pretty sure Siemens manufactures their Kirkland Signature hearing aids.

    1. makes no sense, why should you buy the cow when you only want a glass of milk :-)
      CostCo (or Amplifon) will probably not pay so much and risk to lose many customers of Siemens (i.e. mom & pop shops) just to get this manufacturer… collateral damage!

      1. This is true, but lots of the mom and pop shops have moved away from Siemens over the years, precisely because of their relationship with Costco and others…

        1. In the beginning, but Rexton, though a Siemens owned company, manufactures its own instruments. Siemens has gained a lot of traction back by improving their top-line products. It’s a totally separate market than what Costco aims for. In fact, more mom and pops are shifting away from Phonak and Unitron due to the acquisitions of local practices and smaller multi-location practices.

          Now, it’s rumored that Willian Damant just purchased Accuquest-200 locations across the Midwest. William Damant also owning Oticon and Bernafon (ALSO in Costco). Resound shifted from having the Interton brand in Costco to the Resound label. Mom and pop weren’t too happy about that either.

          I wonder if it makes any of these companies nervous that this is all factual information that a simple hearing aid user learns when researching their hearing aids.

          1. By the way, It’s William DEmant, and I doubt that consumers are that concerned with political infighting among industry groups. Marketing and word of mouth drives the sales, and the crooks are eventually separated from the honest dealers. For years the consumer was saddled with expensive, underperforming hearing aids. At least it’s changed

      2. I’d venture a guess that Sonova and William Demant will be duking it out to get their hands on this one.

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