October 4, 2007

BURLINGTON, ON—Long-time hearing industry supplier of integrated circuits (ICs), Gennum Corporation, has agreed to sell its hearing instrument products and manufacturing operations for $14 million plus considerations to Sound Design Technologies, Ltd, a Gores Equity portfolio company.

The hearing instrument and manufacturing operations will remain headquartered in Burlington, Ontario, according to the companies. Beyond the $14 million sales price, Gennum could receive up to an additional $1.3 million in the event certain financial milestones are achieved by these businesses.

Originally known as Linear Technology Inc (LTI), Gennum Corp has played a considerable role in hearing aid development and manufacturing, helping to introduce ICs capable of performing with a 1.5V battery during the early-1970s. Some notable early achievements of the amplifier capabilities introduced by LTI/Gennum were a push-pull amplifier for elecrect microphones (1972); the first compression IC and first IC to have an on-chip voltage regulator and telecoil pre-amp (1973); the introduction of a modular amplifier concept (1978); the first surface-mount package offered to the hearing industry (1979), as well as several achievements in low-voltage, packaging, and ASP capabilities. In recent years, Gennum’s hearing instrument product portfolio has included digital technology including Foundation®, Advanta™, Venture™ and Voyageur™ products which have been designed into hearing aids and assistive listening devices from a variety of top-tier manufacturers in the hearing industry.

Sound Design Technologies will also acquire a 95,000-square foot manufacturing facility housing 100mm wafer fabrication operations and packaging technologies. Specifically, Sound Design Technologies will obtain Gennum’s thinSTAX® technology, a dense packaging and miniaturization capability for hearing aids and other assistive audio listening devices. Gennum’s Barium Strontium Titanate (BST) capacitor technology and development team will remain with Gennum.

“The shift in Gennum’s strategic focus has given us the opportunity to acquire a dynamic operation in a growing market with a seasoned management team and a loyal customer base,” says Mike Hirano, executive vice-president of operations for Gores Equity. “Gennum’s hearing instrument product portfolio, combined with world-class manufacturing operations and innovative thinSTAX packaging technology, provide an ideal investment opportunity. We are confident that our extensive experience in operations and management, in conjunction with the management team, as well as our ability to finance future product development and deployment, will expand the market for these advanced hearing instrument products.”

The sale is part of Gennum’s strategy to streamline its product portfolio and focus on the rising demand for analog and mixed-signal products in the video and data communications markets. Gennum announced its intention to explore strategic alternatives for its Audio and Wireless Division and associated manufacturing operations in June, and it retained Genuity Capital Markets to assist in the strategic review.

“Gennum has built a strong reputation for delivering world-class hearing instrument products based on our high-performance, low-power DSP technology, and advanced manufacturing capabilities,” said Franz Fink, PhD, president and CEO of Gennum. “With this transaction, we have reached another key milestone in our strategy to focus the company on developing and delivering innovative analog, mixed-signal and optical products to the fast growing video and data communication markets.”

The Gores acquisition groups were founded in 1987 and are a private equity group of firms focused on acquiring controlling interests in mature and growing businesses which can benefit from the firm’s operating experience and flexible capital base, according to the group. The firm combines the operational expertise and detailed due diligence capabilities of a strategic buyer with the seasoned M&A team of a traditional financial buyer. Gores Equity focuses on small mid-market acquisitions. Gores has become a leading investor, primarily in the technology and telecommunications sectors, having demonstrated over time a reliable track record of creating substantial value in its portfolio companies alongside management. Gores Equity maintains offices in Los Angeles, San Diego, and Boulder, Colo.

Source: HR Insider