Widex and Sivantos agree €7bn merger

July 2018 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

July 2018 Issue

In a transaction which will create a global hearing aid leader, Sivantos Group and Widex, the leading companies in this space, have agreed to merge in a transaction valued at €7bn.

Once combined, the businesses are expected to be a top-three contender globally, with a comprehensive, multi-channel sales and distribution platform in more than 125 markets and combined revenues of approximately €1.6bn.

Furthermore, the merger will create one of the most innovative R&D teams in the industry, backed by financial and strategic capabilities as well as strong digital skills to become a global powerhouse for innovative hearing aids and hearing care solutions. Combined R&D resources include approximately 800 specialists in R&D centres located in Singapore, Germany and Denmark, with more than €100m in annual R&D spending.

One of the world’s leading hearing aid manufacturers, Singapore-headquartered Sivantos has 5950 employees, having absorbed the business operations of the former Siemens AG hearing aid division in 2015. A supplier to hearing care specialists and sales partners in more than 120 countries, Sivantos can look back on more than 130 years of German engineering and countless global innovations.

“We and Sivantos share a common vision of giving people unlimited access to a world of sound by providing unparalleled hearing aids and customer services,” said Jan Tøpholm, chairman of Widex. “I am confident that our employees, partners and customers will benefit from this merger as it will allow us to accelerate our efforts to pioneer innovation, quality, manufacturing and customer satisfaction. Further, we will expand our geographical footprint and provide exciting career opportunities for our employees across countries and functions.”

The combined entity will be owned by EQT funds, as well as co-investors the Tøpholm and Westermann families of Denmark, and the Strüngmann family of Germany. The Tøpholm and Westermann families, founders and owners of Widex, will be the largest individual shareholder in the combined entity, reflecting their long-term commitment to the company.

“Sivantos has developed immensely during EQT funds’ ownership and now the idea is to create a game changer for the future of hearing,” said Marcus Brennecke, a partner at EQT Partners and investment adviser to EQT funds. “Combining these two innovative companies will change the hearing experience for people with hearing loss across the world. In Widex, we have found an equally strong partner to Sivantos, sharing a passion for enriching the quality of life for people with hearing deficiencies. The combined company presents a unique opportunity for EQT to extend the investment horizon in Sivantos and take part of the next phase of transforming the hearing aid industry.”

Financing in connection with the Sivantos/Widex merger is provided by J.P. Morgan, Goldman Sachs and Deutsche Bank and is expected to replace existing financing arrangements. Latham & Watkins has acted as financing counsel. Widex is advised by J.P. Morgan, Kromann Reumert and Deloitte. EQT and Sivantos are advised by Freshfields Bruckhaus Deringer, Plesner, PricewaterhouseCoopers and AON. The Boston Consulting Group has provided additional commercial advice.

Mr Tøpholm concluded: “This merger fits with our long-term goals and is why we have decided to substantially invest to become long-term owners.” Mr Brennecke added: “With nearly 170 years of combined experience, Sivantos and Widex will take the lead in developing hearing aid technology for future generations.”

The transaction is subject to regulatory approvals and other customary closing conditions. Until closing, the merger is not expected to affect employees, customers or suppliers.

Fraser Tenant