Published on : May 17, 2018
The strategic merger of equals, whether in technological competency or financial clout, brings shake-ups in the strategic landscape. Among other things, rise in research and development (R&D) funding focused on product innovations can be one of the most potential affects. This is what is being scored by the recent merger between two globally prominent hearing aids manufacturers expected to create a behemoth in the market. Sivantos Pte. Ltd., a German-based manufacturer of hearing aids, currently headquartered in Singapore, and Widex A/S, a Denmark-based hearing aid giant, announced on May 16, 2018 that they have reached an agreement to merge the entities. The combined company, still to be named, boasts of an enterprise value of over 7 billion euros (US$ 8.3 billion), while it will churn out combined revenue pegged at around1.6 billion euros.
With the planned merger, the companies will focus on consolidating their market penetration, pour in more investments into their R&D units, and bolster supply chain efficiencies. The combined entity will put forth a tough competition to leaders in the domain, namely, William Demant and Sonova.
Merger will enable Companies to commit large Funds in R&D and Focus on Supply Chain Efficiencies
According to Sivantos, a spun-off from Siemens Audiology, R&D spends for bringing product innovations is one of the most exciting areas it needs to focus on to gather traction across emerging set of customers. Though, traditionally majority of current consumers are in the age group of 70–80, younger customers are entering the market creating the need for innovative approaches by hearing aid makers all over the world. The R&D activities into which the merged company intends to focus is sensors and Bluetooth technology. And, conferring the ability on hearing aids to capture healthcare data is one of the moves the companies are pondering.
Combined Company to Leverage Potential of Digital Technologies to bring Product Innovations
As per the agreed terms, Swedish private equity group of funds EQT, will own a majority of the stake in the merged group, while the families owning Widex will be the dominant shareholder group. The combined entity has planned to employ at least 800 in their R&D units and will embark on developing tailored solutions in hearing instruments by harnessing the digital platform.
The valuation of the deal is not disclosed yet but in all likelihood and as hinted by the companies, it won’t involve cash.