William Demant has signed an agreement to take over 100% of the shares in the French manufacturer of cochlear implants, Neurelec SA, at a total cost of EUR 57.5 million, or about 73.8 million dollars.
With the acquisition of Neurelec, the William Demant Group will get additional access to a competitive product portfolio of implantable hearing solutions. The Group’s entry into this part of the implant market, which is characterized by significant, long-term growth potential, will complement the company’s Oticon Medical division.
Neurelec develops and manufactures cochlear implants that are sold to hospitals through a network of distributors and a few of its own sales companies. The company is based in the south of France and was the first to launch a fully digital cochlear implant system back in 1992.
The majority of Neurelec’s hearing solutions are sold in a very few markets, including France, where Neurelec’s market share is more than 20%. Under the new ownership, Neurelec will not only have competencies in sound processing at its disposal, it will also benefit from the William Demant Group’s capital base and global distribution network, which will enable Neurelec to expand its business to more international markets.
|William Demant’s brands before the Neurelec acquisition.|
With the acquisition, William Demant will have three product categories (outside its important diagnostic instruments segment) that address different types of hearing loss and thus complement each other: hearing aids, bone anchored hearing solutions, and cochlear implants.
“With the takeover of Neurelec, the William Demant Group will acquire a strategically important business activity and will thus become the only company in the world that covers all three product categories. And since the William Demant Group is also the world’s largest and leading player in diagnostic instruments, the Group now has a unique position when it comes to alleviating hearing losses,” says Niels Jacobsen, president and CEO of William Demant Holding.
The market for cochlear implants has shown annual growth rates of more than 10% for many years, and
due to the still low penetration rate, the company expects the market to also show healthy growth rates in the coming years. Today, annual sales of cochlear implants total 35-40,000 units, or wholesale revenue of EUR 700-800 million in total. Last year, Neurelec generated revenue of DKK 138 million and a modest profit.
“After three successful years during which we have succeeded in obtaining a significant market position in bone anchored hearing solutions, cochlear implants are the next natural step for Oticon Medical. Innovative products, patient safety, service, and support have always been essential drivers of our success, and we expect these elements to continue to form the basis for Neurelec’s further development,” says Jes Olsen, president of Oticon Medical.
William Demant says it will maintain Neurelec’s present organization in France. In the longer run, the ambition is for Neurelec to obtain a position as one of the leading players in the area of cochlear implants.
SOURCE: William Demant Holding Group