EQT buys Siemens Audiology Solutions for €2.15bn

The group stated it intends to list the company in the future.

EQT used its sixth vehicle – a €4.75bn fund closed in October 2011 – to finance the acquisition. It invested alongside the Germany-based Strüngmann family, who took a minority stake via its investment vehicle Santo Holding.

Deutsche Bank, Goldman Sachs and UBS provided debt financing for the deal, with a 50% leverage ratio. The entire debt package consisted of both senior debt and high-yield bonds.

Hermann Requardt, CEO of Siemens, stated the company has also reinvested €200m of its proceeds from the deal to remain involved with its hearing aid business as a shareholder and to benefit from future profits. Siemens will also take a seat on the new board implemented by EQT and will continue to use the Siemens brand on the hearing aids in the medium term.

Siemens first developed a telephone receiver specifically designed for those with hearing impairments in 1878, marking the beginnings of the audiology business. Although Siemens itself is headquartered in Munich, SAS is headquartered in Singapore, with its research and development division, as well as most of its management team, located in Germany.

The 5,000-strong company sold three million hearing aids during the last 12 months and generated revenues of €693m.The reported EBITDA is €145m, but adjusted EBITDA was claimed by Marcus Brennecke, a partner at EQT, to be higher than €150m.

EQT and the Strüngmann family knew each other well from having looked at a previous deal together. The family then contacted EQT to register their interest in investing alongside the group. According to Brennecke, this strengthened the private equity firm's offering, as Siemens felt an industry-led approach was important.

One of the Strüngmann brothers will take a seat on the board. EQT will have approximately four board seats for industry specialists.

EQT had been looking at the healthcare industry for many years and had looked at SAS in 2010 when it was originally put up for auction.

The private equity group stated it would be supporting management by investing in product development and improving the sales team. Brennecke also stated that apart from organic growth, there may be the opportunity for market consolidation on top of this strategy.

The GP also intends to leverage its experience from current and former healthcare investments. In June 2012, EQT acquired Hamburg-based BSN Medical for €1.82bn from Montagu Private Equity, using a senior debt and mezzanine package worth around €1.13bn from a banking consortium. BSN manufactures and distributes medical supplies in the wound care, compression therapy and orthopaedics segments.

EQT purchased Swedish medical devices company Atos Medical one year previously. Nordic Capital reportedly sold the company for around €300m. Atos develops, manufactures and markets ear, nose and throat-related products.

Freshfields, Bain & Company, PwC, Latham & Watkins and Aon advised EQT, while Santo Holding was advised by honert + partner.

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• Topics
• DACH
• Buyouts
• Healthcare
• Germany
• EQT