UPDATE: Siemens Suspends Hearing-Aid Unit Sale On Low Bids

Siemens AG (SI) suspended the sale of its hearing-aid unit in which several private-equity firms have shown interest, people familiar with the matter told Dow Jones Newswires Monday.

A deal couldn't be reached due to different expectations on price, one person said.

"Siemens has made no statement yet, but it's understood that the sales process won't proceed," another person said.

It was possible that the sales process could resume at a later date, but not in the next few months, another person said. He added that, at this stage, there was no intention to float the unit instead of selling it.

Siemens was looking to sell the business for close to EUR2 billion, according to documents reviewed by Dow Jones Newswires, but investors are willing to pay only between EUR1.5 billion and EUR1.6 billion.

Among the bidders are Permira, which had teamed up with Nordic Capital to make a joint bid. Other bidders include a consortium made up of Australian cochlear-implant maker Cochlear Ltd. (COH.AU), Hellman & Friedman and Kohlberg Kravis Roberts & Co., as well as Cinven Group and Bain Capital.

One person said that the unit's continuing decline in profitability was the main reason that bids fell short of Siemens' expectations.

Siemens' hearing aid unit posted sales of EUR550 million in 2009 down from EUR565 million in 2008. Its margin on earnings before interest, tax, amortization and depreciation, or Ebitda, fell to just below 30%, down almost 5 percentage points from 2008. The decline in profitability continued, one person said Monday.

-By Archibald Preuschat, Marietta Cauchi and Eyk Henning, Dow Jones Newswires; [phone]; [e-mail]