On 2nd April, William Demant entered into an agreement to acquire 100 per cent of the shares of Neurelec for EUR 57.5 million (DKr 428 million). The purchase agreement does not contain any future earn-out payments.
The acquisition will allow William Demant to gain additional access to a product portfolio of implantable hearing systems. Neurelec develops and manufactures cochlear implants that are sold to hospitals through a network of distributors and a few own sales companies. It was established in 2006 as a spin-off from its holding company, MXM. The majority of Neurelec's hearing systems are sold in a few markets, including France, where the company's market share is more than 20 per cent.
Under the new ownership, Neurelec will gain competencies in sound processing and benefit from William Demant's capital base and global distribution network. With the acquisition of Neurelec, William Demant is claimed to become the only company in the world that covers all three audiology product categories: hearing aids, bone anchored hearing solutions and cochlear implants.
William Demant reportedly wants to maintain Neurelec's present organisation in France. The acquisition will at first dilute William Demant's profitability, but, in the longer-term, it is believed that Neurelec will generate a profit margin on par with the average profit margin in William Demant's other business activities. William Denmat that the acquisition of Neurelec will impact its revenue in 2013 by approximately DKr 100 million, corresponding to around three quarters of the revenue realised in 2012, and expects to see a neutral impact on EBITA in 2013.