According to Bloomberg sources, Siemens AG (ADR) (OTCMKTS:SIEGY) (FRA:SIE) is in advanced talks to sell its hearing-aids division for more than $2.6 billion, as slumping equity markets make an anticipated stock listing a less attractive option.
Private-equity firm EQT Partners AB is the frontrunner and highest bidder to date, said knowledgeable sources who spoke to Blomberg, but who preferred to remain anonymous because talks are private. The sources noted that firms including Permira Advisers LLP and Danish hearing-aids maker GN Store Nord A/S (CPH:GN) (OTCMKTS:GNNDY) have also submitted bids. They added talks were still ongoing and could fall apart, but a deal could happen in the next few weeks. No suitable deal would likely lead Siemens to go ahead with the IPO or spin the audiology unit off to shareholders.
Michael Mauboussin: Here’s what active managers can do
The debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More
Analysts note Siemens had been planning an IPO for the hearing-aids division on the stock market, with CEO Joe Kaeser saying that such a move would help the business grow. However, given current market conditions Siemens would prefer a sale, the sources said. The division has annual sales of around $1 billion and core earnings of over $200 million.
EQT looking to acquire assets
Analyst note EQT has tried to purchase several large corporate assets this year, including other medical-device makers. The Swedish PE firm bid for Nobel Biocare Holding AG, a Swiss maker of dental implants, but lost out to Danaher Corp. earlier this fall.
Recent Siemens deals
Of interest, Munich-based Siemens has already sold off two health-care divisions and its stake in a household appliances joint venture this year as the firm increases its focus on equipment for energy generation and supply. Siemens cancelled a planned sale of the audiology unit four years ago because the offers didn’t meet an internal target of least 2 billion euros, according to sources familiar with the matter.
These asset sales come as Siemens spends $7.6 billion to buy Dresser-Rand Group Inc. (NYSE:DRC) and $1.3 billion for Rolls-Royce Holding PLC (LON:RR) (OTCMKTS:RYCEY).’s energy business. The new acquisitions are designed to expand the firm’s offerings in regard to equipment to extract shale gas from hydraulic fracturing (fracking).