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Cochlear (ASX: COH) has completed its buyout of the hearing implant operations of Danish competitor Oticon Medical from parent company Demant after the deal was cleared by the Australian competition watchdog last month.
The acquisition, which initially comprised a $170 million takeover of Oticon Medical, was revised to just include the target’s cochlear implants business after the deal was initially opposed by the UK Competition and Markets Authority (CMA) in April last year.
The Australian Competition and Consumer Commission last month cleared the deal after Cochlear’s proposed buyout excluded Oticon Medical’s bone conduction solutions business.
The ACCC noted that Oticon Medical has a small market share in the cochlear implant sector in Australia and, as such, the acquisition does not lessen competition in the market.
In Australia, Cochlear and Oticon Medical are two of only three suppliers of non-surgical bone conduction and bone anchored devices, and two of only four suppliers of cochlear implants.
The ACCC’s approval follows the UK’s CMA giving its blessing to the deal in June last year after Cochlear revealed it would revise its offer to exclude the bone conduction implants business.
Cochlear today has confirmed that it has acquired Demant's cochlear implant business for a “zero headline purchase price”, completion of which will provide ongoing support for Oticon Medical’s current base of around 20,000 cochlear implant recipients.
“We welcome Oticon Medical’s cochlear implant customers to Cochlear and remain committed to supporting the long-term hearing outcomes of these 20,000 patients” says Cochlear CEO Dig Howitt.
“Customers are our priority as we work closely with Demant for a smooth transition.
“Driven by our mission to innovate and deliver a lifetime of hearing outcomes, we will seek to provide Oticon Medical’s cochlear implant customers continued support with a lifetime of hearing solutions.”
Howitt says Cochlear plans to develop and commercialise next-generation sound processors and services to enable the “vast majority of customers to transition to Cochlear’s technology platform over time”.
“We will also support customers with continued access to repairs and replacements of current Oticon Medical cochlear implant technology for as long as feasible,” he says.
Cochlear expects Oticon Medical’s implant business to be integrated into the company’s operations over the next few months.
Integration costs of about $30 million before tax, which primarily involve restructuring expenses, will be reflected in the company’s FY24 profit result.
Cochlear’s underlying net profit guidance for FY24 of between $385 million to $400 million will not be impacted by the integration expense which Cochlear says will be reported as a non-recurring significant item.
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