Bloomberg News

Ex-Siemens Executive Chapero Said to Attempt Hearing-Aids Deal

August 29, 2013

Valentin Chapero, the former chief executive officer of Siemens AG (SIE)’s hearing-aids business, approached the company to broker a sale of the unit to a private-equity firm, said people familiar with the matter.

Chapero, who left the company in 2002 to run Swiss hearing-aid maker Sonova Holding AG (SOON) and then went on to start investment company Valamero last year, is trying to persuade Siemens to sell the unit, the people said. The Munich-based company ended talks with buyout firms in 2010 because bids didn’t meet a target for least 2 billion euros ($2.7 billion), people familiar with the matter said at the time.

The former Siemens executive would offer to take a leadership role and the private-equity partner would provide most of the money, the people said, asking not to be identified as the talks are private. Siemens spokesman Alexander Becker and Chapero yesterday declined to comment.

Siemens, which last month appointed former Finance Chief Joe Kaeser as new CEO, first wants to complete already announced disposals for assets in water treatment, parcel automation, airport logistics and air freight, before considering another attempt to dispose of the hearing-aid division, the people said. A potential sale of the hearing-aid business is therefore unlikely to happen this year, they said.

‘Attractive Multiples’

“The company failed to sell its hearing aids unit in 2010, but we believe that it may once again consider a divestment,” Commerzbank analyst Ingo-Martin Schachel said in a note to clients this month. “The hearing aids segment is the only remaining business-to-consumer activity of the company. Additionally, the hearing aids sector trades on attractive multiples, which would make a divestment appear even more attractive.”

Schachel said the unit may have an enterprise value of 1.7 billion euros, based on estimated annual sales of 800 million euros and earnings before interest and taxes of 136 million euros.

Siemens may also consider an initial public offering or a spin-off of the unit, one of the people said.

“We regard the listing of the unit as the most likely option, which could involve either an IPO or as a spin-off,” Schachel said.

Siemens shares yesterday reversed losses in Frankfurt trading and ended up 0.3 percent at 81.46 euros after earlier declining as much as 0.8 percent. The stock has gained 2.3 percent this year, valuing the company at 72 billion euros, while the German DAX index rose 7.7 percent.

Independent Unit

During the 2010 process, the asset drew interest from buyout firms including Permira Advisers LLP, KKR & Co. (KKR:US), Nordic Capital, Hellman & Friedman, Cinven Partners, Bain Capital and BC Partners, people familiar with the matter said at the time.

In addition to private-equity firms, makers of medical equipment such as Hansaton GmbH and Cochlear Ltd. were also interested, the people said. Other competitors of the Siemens unit include Sonova and William Demant of Denmark.

Siemens, Europe’s biggest engineering company, is revamping its health-care unit to focus more on cheaper clinical products such as x-ray and ultrasound that are in higher demand in emerging markets. After the failed 2010 sale, the company said it will run the hearing-aid division as an independent unit within the healthcare sector.

Siemens, which also makes high-speed trains and power grids, has been making the hearing products for more than 100 years, and the business is based in Erlangen in southern Germany, home to some of the company’s largest production sites.

Insider Probe

Chapero this year has been in contact with private-equity companies to see if they would be interested in the asset, two of the people said, adding that he has also approached senior Siemens managers several times, including as recently as this month.

Chapero resigned as CEO of Sonova in March 2011 along with the chief financial officer and chairman amid an investigation of insider sales at the Staefa, Switzerland-based hearing-aid maker. The Zurich prosecutor later determined the executives didn’t use insider knowledge to earn money.

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Angela Maier in Munich at amaier8@bloomberg.net; Allison Connolly in London at aconnolly4@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net


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