It seems we there is an ongoing war between GN and William Demand (AKA Oticon) for the
acquisition of Sonic. For those in Australia, are they big there???
Taastrup, Denmark — GN ReSound A/S announced October 12 that it has updated its proposal to purchase Otix Global, the parent company of Sonic Innovations, Salt Lake City. This comes in response to Smorum, Denmark-based William Demant Holding’s match of GN’s previous $58 million counter offer for the company. GN has now sweetened the pot to the tune of an additional $6.2 million, to $64.2 million.
William Demant Holding (WDH), the parent group of Oticon and Bernafon, had raised its initial $50 million offer to $58 million — matching the counter made at the end of September by GN Store Nord A/S — in an effort to secure a WDH-Otix Global merger that would bring Sonic Innovations and the HearingLife distribution network into the WDH group.
It all began on September 13, when Otix and William Demant Holding, the parent group of Oticon and Bernafon, announced a “binding, conditional merger agreement” in which Otix would be merged into the WDH Group for $50 million (see “Sonic Innovations To Join Oticon, Bernafon Under William Demant Umbrella,” The Insider, Sept. 16).
But on September 27, GN Store Nord A/S announced that GN ReSound A/S had offered $58 million to acquire Otix Global, the parent company of Sonic Innovations, Salt Lake City. GN requested that the Otix board reconsider its agreement with WDH and accept a higher bid of $58 million, or about $73-78 million on the closing balance sheet (see “Otix-WDH Deal for Sonic May Be Nixed by GN’s Bid of $58 Million”). GN reported that the acquisition will “complement GN ReSound’s strong US presence and secure a significant position for GN ReSound in the Australian hearing aid market.”
In response, WDH released a statement October 6 that it had signed an addendum to the existing merger agreement in which Otix stockholders would receive a total settlement of $58 million, or a price of $10 per stock. The updated offer represents an approximate $8 million increase of the price stated in the original merger. Otix Global’s distribution activities in the United States and Australia are expected to continue without any change, and will form a natural part of WDH’s distribution activities. According to industry analysts, the transaction, if completed, would increase WDH’s global market share by about 1 percentage point in terms of unit volume. “We still expect to be able to close the transaction as previously communicated,” the company said in the statement.
In the original September 13 statement by Otix, company Chairman and CEO Sam Westover said, “In a short period of time, Otix Global has grown from an innovative start-up company to a leading manufacturer and distributor of superior hearing solutions under its Sonic and HearingLife brands. Our product lines have garnered industry attention and awards and are representative of the innovative technology for which Otix is known. The merger with William Demant will provide the research and development, marketing and sales support, and resources necessary to further expand Sonic and HearingLife’s presence in the hearing health care industry.”
Statements by Otix and William Demant Holding were not yet available at the time of this report, and it is unclear what actions are now being considered by the companies.
Otix Global sells hearing aids under the Sonic Innovations brand — reportedly the world’s eighth largest hearing instrument manufacturer — owning and operating its distribution networks in the USA and Australia (HearingLife). In 2009, the company recorded a turnover of $96 million and an operating loss (EBITDA) of $3.7 million. At year-end 2009, Otix Global’s equity amounted to $32 million. The previous proposed merger, as reported by market analysts, would have increased WDH’s global market share by about 1 percentage point.