Somerset, NJ — William Demant Holding (WDH), parent company of Oticon, Somerset, NJ, announced the closing of the merger with Otix Global, Inc (Otix), parent company of Salt Lake City-based Sonic Innovations.
The two companies have officially received antitrust clearance from US Federal Trade Commission (FTC) for the planned merger. Consequently, all conditions in the binding, conditional merger agreement between WDH and Otix have been met and the closing of the transaction is completed.
With the acquisition of Otix Global and thereby the Sonic brand, a third brand has been added to the two existing hearing aid brands of William Demant Holding. WDH said in the presss statement that it expects that the Sonic brand will play an important part in relation to selected customer segments particularly in the US, which already constitutes the main market for the Sonic products.
In connection with the transaction, WDH says it has agreed on a termination plan covering Otix’ current senior management team, under which each member will step back over the coming four months. The responsibilities of the individual Otix managers will be transferred to a new group mainly recruited from existing management teams in the William Demant Holding Group.
To manage the Sonic business going forward Joseph A Lugara has been appointed president of Sonic in the US. Lugara reportedly has over 25 years of experience in the hearing aid industry, the last three years with the WDH.
WDH stated that takeover of Otix Global is expected to generate substantial synergies to be harvested over the coming 12-18 months as the Sonic brand will benefit from WDH’s competitive infrastructure and R&D capabilities.
Part of the plan is to integrate Otix with WDH’s current administrative infrastructure, including areas such as finance and IT. Also, the transaction is seen by WDH as an opportunity to strengthen Sonic’s product portfolio by utilizing WDH’s underlying technological capabilities, thereby leveraging the Group’s significant R&D efforts.
Sonic US operations and the future brand headquarters will be relocated to New Jersey where Oticon is based. As a result, Otix’s head office in Salt Lake City, Utah will be discontinued.
In terms of Sonic’s manufacturing, Otix’ production site in Eagan, Minnesota will continue without changes in order for WDH to fulfill the growth ambitions for the Sonic brand. However, with the aim of optimizing the future manufacturing, WDH reports that it has initiated a production review process.
Otix’s current hearing instrument distribution activities under the Hearing Life brand will be added to WDH existing distribution activities.
In addition, as part of the Sonic acquisition, WDH has acquired German-based Sanomed, which has hearing aid retail as its core business. As a result of recent changes in the German legislation, Sanomed has stopped the distribution of hearing aids, but the need to provide after sales service to the existing customers remains.
With the transaction completed, stockholders of Otix Global will receive a total settlement of USD 64.2 million equivalent to approximately DKK 370 million, with cash flow impact in 2010.
The final merger between WDH and Otix comes after a bidding war with GN Resound, parent company of ReSound, during September and October. Ultimately, William Demant won with a final matching bid on October 13th.