Six Suitors for Siemens Hearing Aid Unit

LONDON/FRANKFURT (Reuters) – Siemens AG (SIEGn.DE) has shortlisted a strategic buyer and five private equity firms as potential buyers of its hearing aid unit, potentially worth over 2 billion euros ($2.89 billion), several people familiar with the matter said.

Siemens, the German industrial conglomerate, makes a broad range of products from trains to light bulbs, but is sharpening its focus on core areas and put the unit up for sale late last year.

The auction, now in its second round, points to a returning appetite for multi-billion euro European leveraged buyouts (LBOs) by private equity firms, which have been starved of debt and deal opportunities for much of last year.

Bain Capital, Cinven [CINV.UL], Hellman & Friedman, KKR [KKR.UL] and Permira [PERM.UL] are all vying for the unit, which Siemens hopes will fetch more than 2 billion euros, the sources said. A strategic acquirer is also seeking to buy the unit, they said.

Cinven, Permira and Siemens declined to comment. Bain, H&F and KKR were not immediately available to comment.

Two of the buyout houses are working together, one of the sources said, adding that some other trade bidders such as Danaher Corp (DHR.N) and Procter & Gamble Co (PG.N) had earlier shown interest but had since left the race.

The field of private equity firms has been narrowed from a much wider initial group, including CVC [CVC.UL] and BC Partners, the sources said.


The unit, which competes with Switzerland’s Sonova Holding AG (SOON.VX) and Denmark’s William Demant Holding A/S (WDH.CO), is projected to make earnings before interest, tax, depreciation and amortisation (EBITDA) of some 170 million euros in 2010, the sources added.

The listed rivals trade at a market value of about 16.5 times and 15 times forecast EBITDA, based on earnings forecasts compiled by Thomson Reuters I/B/E/S. Antitrust hurdles are likely to preclude bids from either company.

However, the Siemens unit performed less well than either rival in 2009, some of the sources said, with both revenues and margins shrinking, and is likely to sell at a lower multiple.

But Siemens projects strong growth at the unit and bidders will be hoping they can rapidly improve its fortunes, the sources added.


Bidders will now gain access to a data room and hear management presentations in the coming days, the sources said. After receiving binding bids, Siemens hopes to pick a winning bidder by the end of February, they added.

The auction underlines a returning hunger among private equity firms for deals: buyout firms are circling several major European businesses including German drugmaker Ratiopharm and British retailers Pets at Home and Matalan [MTLAN.UL].

The funds are hoping to capitalise on renewed appetite from banks to lend, after Sweden’s EQT secured a 1 billion pound ($1.61 billion) loan to buy Springer Science and Business Media [SPSBM.UL] in December. [ID:nN18217896]

Buyout firms may be able to raise debt equivalent to as much as 5.5 times the Siemens unit’s EBITDA, one of the sources said, equating to roughly 935 million euros. That would still require a bidder to fund more than half a 2 billion euro deal with equity.

Shares in Siemens were 0.2 percent higher at 65.62 euros by 1305 GMT, giving the company a market capitalisation of close to 57 billion euros.

UBS is running the sale. ($1=.6920 Euro) ($1=.6208 Pound) (Visit the Reuters DealZone blog here)

By Quentin Webb and Philipp Halstrick
(Additional reporting by Simon Meads in London, Marilyn Gerlach in Frankfurt and Jens Hack in Munich; editing by Elaine Hardcastle and Rupert Winchester)