Thursday, March 18, 2010

Cochlear's bid falls on Siemens' deaf ears

Cochlear's bid falls on Siemens' deaf ears

BIONIC ear company Cochlear has missed out on acquiring the hearing-aid business of Germany's Siemens, which has dropped plans to sell the division after failing to get bids of more than E2 billion ($3bn).

Cochlear chief executive Chris Roberts declined to comment yesterday and refused to be drawn on speculation that Cochlear had been working with private-equity firms Hellman & Friedman and Kohlberg Kravis Roberts on a joint bid for the division.

According to reports, Siemens was looking to sell the business for more than E2bn but investors were prepared to pay only between E1.5bn and E1.6bn.

Another bidder interested in the business was Permira, which teamed up with Nordic Capital to make a joint bid.

One analyst said a continuing decline in profitability at the hearing-aid business was the main reason bids fell short of Siemens's expectations. Siemens's hearing-aid unit posted sales of E550 million last year, down from E565m in 2008.

The unit's margin on earnings before interest, tax, amortisation and depreciation fell to just below 30 per cent, down almost 5 percentage points from the previous year.

Cochlear announced last month that it expected its full-year net profit to increase by 15 per cent to $150.1m as sales of its new generation implant, the Nucleas 5, gathered momentum.