Siemens AG is considering expanding its footprint in the hearing-aid industry with a potentially unfriendly takeover of HearUSA, one of the largest hearing-aid retailers in the United States. Siemens last year moved to exit the industry when it put its Siemens Hearing Instruments subsidiary up for auction but subsequently reversed course and recommitted to its hearing-aid business. Now, in a Schedule 13D filing on Jan. 18 with the U.S. Securities and Exchange Commission (SEC), it says it is considering exercising an option to buy out Hear USA following the Orlando, Florida-based company’s failure to make a timely debt payment. In the filing, Siemens said that in a Dec. 22 meeting, Hear USA had asked to defer some part of its debt payments scheduled for the end of December (approximately $1.9 million USD) and the end of January (approximately $2.2 million). Siemens, which already has a 14.9 percent stake in HearUSA, indicated in its SEC filing that rather than allow future deferment of debt payments, it would consider acquiring the company.
HearUSA Chairman and CEO Stephen Hansbrough responded quickly with a news release saying that “statements made by Siemens in its Schedule 13D fail to provide all of the facts about our relationship with them and our position.” Indicating that there were disagreements about “legitimate contract issues” that the two parties had yet to resolve, Hansbrough said “we are very disappointed that Siemens has taken this negative and heavy-handed approach.”
Siemens and Hear USA have a long-term relationship, with Siemens providing substantial funding to Hear USA in return for the retailer’s promise to re-sell Siemens’ hearing aids. HearUSA has struggled through the recession to grow profitably, but Hansbrough said in his statement that orders for new hearing aids are running approximately 13 percent ahead of a year ago, and that the company expects to return to profitability in 2011. In the past several years HearUSA has expanded its sales for managed care organizations through its network of more than 2,000 hearing care providers and 176 company-owned retail locations. It is also the administrator of the AARP Hearing Care Program, which reaches millions of potential hearing-aid customers.
Randall Reese says
Just a note of follow up on this story – an affiliate of Siemens Hearing Instruments, Inc. (Audiology Distribution, LLC) has now submitted a competing bid to acquire substantially all of HearUSA’s assets through the on-going bankruptcy court auction process. We’ve written an article about the bid on our blog, which can be found at: http://blog.ch11cases.com/2011/07/hearusa-receives-competing-bid-from.html
former employee says
….as a former employee with a little common sense and a working ability of the internet and a little look see, they wouldnt be in danger of a buy out or take over if the management wouldnt have been so greedy to pay them selves those huge bonuses and stole the money from the employee pay reductions…silly steve and gino..
Paul says
I have worked in the UK hearing aid market for many years and have seen the gradual blurring of the distinction between hearing aid manufacturing and retail. Will this ever end or will the market end up being controlled by the manufacturers?