With the conclusion of its multi-billion-dollar acquisition of Siemens AG’s audiology business Thursday, a private investment group led by EQT Partners announced a new name for the company — Sivantos Group — along with an ambitious agenda to quickly make its presence felt as one of the world’s largest independent hearing aid manufacturers.
Siemens Hearing Instruments for decades had been among the “Big Six” manufacturers that account for more than 80 percent of the world’s hearing aid sales. But it’s been five years since the parent conglomerate announced it wanted to spin off its hearing aid business, and the tortuous, stop-and-go process that finally led to yesterday’s announcement left many industry observers scratching their heads:
- In early 2010 Siemens AG tried to auction off the business, but in spite of bids from multiple private equity groups, the parent company couldn’t get the price it wanted so shut down the sale.
- In early 2013, rumors floated in the media that Siemens was planning once again to put the unit up for sale.
- Then, in May 2014 Siemens announced a plan to spin it out as an independent public company with the sale of stock to the public.
- Finally, in November 2014, Siemens reversed course again, deciding instead to sell the audiology business to EQT Partners, a private investment fund started by the Wallenberg family in Sweden, and Germany’s Strungman family, with Siemens AG maintaining a minority equity position.
During those years of uncertainty about the future of the business unit, Siemens Hearing Instruments continued developing and delivering new products to market, but it remained in the shadow of its behemoth parent. Meanwhile other industry leaders leapfrogged it with new technologies. Though Siemens had been first with wireless communication between hearing aids and advanced sound processing algorithms a decade ago, GN ReSound, Oticon, Starkey and Sonova’s Phonak and Unitron brands subsequently took turns with first-to-market advances in wireless audio streaming to hearing aids, invisible hearing aids, the first “Made-for-iPhone” hearing aids, smartphone hearing apps, and other innovations.
When Siemens announced last November it had reached an agreement to sell Siemens Audiology to the investor group for €2.15 billion euros ($2.48 billion USD) in a deal that was supposed to close sometime in the first quarter of 2015, the question became how quickly the new group would take control and re-boot the Siemens hearing aid business as a major independent “Big Six” entity.
With the January 15 announcement that the deal was done, the new owners made it clear they intend to put their foot on the accelerator to compete for market share aggressively by developing and delivering new products and technologies. In addition to announcing that Sivantos will be the new name of the company, they named as CEO of the Sivantos Group the current head of Siemens Audiology, Roger Radke — providing continuity for a global workforce of more than 5,000 employees who have been wondering what the future will bring.
Radke, who presided over the introduction of the new Siemens binax(tm) technology platform last October, said in a news release that Sivantos is committed to “accelerating the development of smart products and applications that deliver practical benefits to people with hearing loss.” With reported revenue of €690 million ($797 million USD) in fiscal 2014, strong pre-tax earnings of €126 million ($146 million USD), and additional capital available from the private equity firms that acquired the company, Sivantos should have the financial resources to deliver on Radke’s promise.
In the short run, Sivantos will continue using the Siemens brand name for its hearing aids and other audiology solutions, while it also continues to own and operate another former Siemens-owned hearing aid brand, Rexton. With a strong retail presence and loyal base of audiologists who stuck with both Rexton and Siemens Hearing Instruments as a supplier through all the parent company’s uncertainty, continuing with the existing brand names, at least for the time being, makes a lot of sense.
But if the public announcement of its new and very different Sivantos Group corporate name is any indication of things to come, don’t be surprised if we see a lot more aggressive marketing and communication around new products, from what used to be the staidest member of the Big Six.