EQT has merged its German hearing aid manufacturer Sivantos with Danish family-owned business Widex, which operates in the same area.
The deal gives the merged entity an enterprise value of more than €7bn.
The combination will create a business with revenues of around €1.6bn and 10,000 employees. The company will be headquartered in Denmark and Singapore and its sales platform will cover more than 125 markets.
Three EQT funds – EQT VI, EQT VII and EQT VIII – will own the newly combined business, while Widex’s owners and founders, the Tøpholm and Westermann families, will become the largest individual shareholders.
The merger aims to strengthen market penetration and enhance efficiencies to further grow the merged business’s research and development capabilities and supply chain. The business’s combined R&D resources give it around 800 specialists with an annual spend of €100m.
“Sivantos has developed immensely during EQT funds’ ownership and now the idea is to create a game changer for the future of hearing,” EQT partner Marcus Brennecke said.
“In Widex, we have found an equally strong partner to Sivantos, sharing a passion for enriching the quality of life for people with hearing deficiencies. The combined company presents a unique opportunity for EQT to extend the investment horizon in Sivantos and take part of the next phase of transforming the hearing aid industry,” he added.
EQT owns 52 per cent of Sivantos. It bought the business from Siemens in 2015 for €2.15bn plus an earn-out component. The Wallenberg family acted as anchor investor and German healthcare entrepreneurs the Strüngmann family co-invested.
Sivantos, formerly Siemens Audiology Solutions, generated revenues of €693m and Ebitda of €145m for the 2014 fiscal year. At that time it employed 5,000 people.
Widex’s products are sold in more than 100 countries and it employs over 4,000 people.
Financing was provided by J.P. Morgan, Goldman Sachs and Deutsche Bank with Latham & Watkins acting as financial counsel. Widex was advised by J.P. Morgan, Kromann Reumert and Deloitte, while Sivantos turned to Freshfields Bruckhaus Deringer Plesner, PwC and AON. The Boston Consulting Group provided additional advice.