Siemens May Consider Reviving Sale of Hearing Aid Unit

Germany's Siemens AG (SI) is considering reviving its effort to sell its hearing aid unit later this year, as part of a larger disposal program aimed at cleaning up the industrial conglomerate's portfolio of operations.

Munich-based Siemens could start another sales process for the unit, valued at around EUR2 billion, as early as in the second half of the year, two people familiar with the talks said. One of the people suggested that private equity companies could be interested in the unit given good conditions on debt financing markets and the scarcity of other potential targets.

A Siemens spokesman declined to comment on the information.

Siemens halted a first attempt to sell its hearing aid unit in early 2010 as operating performance worsened during the process. As a result bidders were only willing to submit binding offers of around EUR1.6 billion, after initially offering over EUR2 billion. Among the parties interested at that time were a consortium made up of financial investors Permira and Nordic Capital, as well as a consortium comprising of Australian implant maker Cochlear Ltd., which teamed up with Hellman & Friedman. Kohlberg Kravis Roberts & Co., Cinven Group and Bain Capital were also said to be looking at the asset at that time.

Following the flop, Siemens invested heavily in the unit to ramp up the product range and improve their quality.

The global hearing aid devices market was valued at $7.2 billion in 2011 and is forecasted to grow to $11.3 billion by 2018 at an annual growth rate of 7%, according to a recent report published by the firm researchandmarkets.

The global market for hearing aids is largely split up between a few companies. According to analysts, the top six players--Sonova Holding, William Demant Holding, Siemens and GN Store Nord's ReSound, Starkey and Widex--control the bulk of the global market, meaning consolidation between them would likely be scrutinized by antitrust authorities.

For Siemens, the disposal of the hearing aid business would mark the exit from B2C activities, after the intended spin-off of its lighting unit Osram scheduled for late April at the earliest.

A sale of the hearing aid unit would also add to the string of asset disposals worth several billion euros Siemens recently announced. The company has mandated banks to sell four of its operations, namely its Water Technologies unit, postal automation and baggage handling businesses, the security products arm as well as its solar unit, several people familiar with the matter have said.

Siemens may also strike a deal exiting the network-equipment joint venture Nokia Siemens Networks after the shareholder pact with the Finnish partner expires in April, these people added.

Write to Eyk Henning at [e-mail], (Ursula Quass contributed to the report.)

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