ReSound Corporation Announces Definitive Agreement to Be Acquired by GN Great Nordic for $180 Million

ReSound Corporation (Nasdaq: RSND) and GN Great Nordic today announced the execution of a definitive agreement whereby GN Acquisition Corporation, a wholly-owned subsidiary of GN Great Nordic, would purchase for cash all outstanding shares of ReSound common stock for $8.00 per share. The board of directors of ReSound has unanimously approved the transaction and resolved to recommend that ReSound shareholders accept the offer.

Under the terms of the merger agreement, GN Acquisition Corporation will initiate a tender offer for all of the outstanding shares of ReSound to commence within five business days. Once initiated, the offer will be open for twenty business days unless further extended. GN Acquisition Corporation's tender offer is conditioned upon, among other things, there being validly tendered and not withdrawn a number of shares that equals at least ninety percent of the outstanding shares of ReSound. After the consummation of the tender offer, GN Acquisition Corporation has agreed to acquire any of the remaining outstanding shares of ReSound pursuant to a second-step merger at the same price per share paid for shares tendered.

ReSound is a hearing health care and human communications company that designs, develops, manufactures and markets technologically advanced hearing devices and communications devices. ReSound's products utilize proprietary sound processing technology originally developed by AT&T Bell Laboratories and subsequently enhanced and refined by ReSound. Products include the Digital 5000 Series products, which incorporate fully software-based digital sound processing technology; a complete product portfolio of digitally programmable devices; fitting systems for programming, fitting and fine-tuning for all ReSound programmable devices; the Avance Hearing Enhancer, an innovative, low cost product for people with mild hearing impairment; and the CommPort System, an integrated microphone and receiver system marketed and sold by Motorola to public safety personnel.

ReSound's business will be combined with GN Great Nordic's GN Danavox subsidiary, an international manufacturer and distributor of a full range of advanced hearing devices, audiological diagnostic equipment and other hearing-related products. The GN Danavox product portfolio includes Danalogic, a software-based digital hearing device with digital feedback suppression and Danasound, a range of digitally programmable products; as well as leading integrated computer-based audiological measuring equipment, the Aurical, for diagnosing hearing loss and adjusting and testing hearing devices. In 1996, GN Danavox and ReSound, along with AudioLogic, formed a strategic alliance to develop a standard hardware platform for digital signal processing technology.

The combined companies will have revenues in excess of $200 million and will be a world wide market leader in hearing health care. GN Great Nordic intends to establish the headquarters of its hearing health care operations in Redwood City, California. In addition, products will continue to be sold under the ReSound and GN Danavox brand names.

The GN Great Nordic Group, headquarted in Denmark, is a global communications company with special focus on tele/data communications products and services and audiological products. In 1998, the GN Great Nordic Group had revenue of approximately $604 million.

In a joint statement, Russell Hays and Jesper Mailind, ReSound's and GN Danavox's chief executive officers, respectively, noted that the benefits of the proposed merger offer significant opportunities for growth and achievement in the worldwide hearing health care environment.

"ReSound and GN Danavox are an excellent strategic fit. Our combined ability to offer truly meaningful solutions to our end users to improve not only hearing but human interaction is strengthened considerably. We believe the combined companies will gain significant advantages together: stronger and broader distribution channels, a more robust manufacturing capability, and an increased, more solid product development pipeline," said Hays.

Mailind stated, "GN Danavox expects to benefit from the merger through enhanced revenue growth and strengthened worldwide market presence. The combined company will be well-positioned to capitalize on our key synergies to become a leading hearing health care company."

Upon consummation of the merger, Russell Hays will continue as president and chief executive officer of the combined companies for an interim period and then will be succeeded by Jesper Mailind, who is the current GN Danavox president and chief executive officer. During the interim period, Mailind will be executive vice president and chief operating officer of the combined companies.

GN Acquisition Corporation expects that the necessary filing with the Securities and Exchange Commission in connection with the tender offer will be made within the next several days and that offer documents will be mailed to ReSound shareholders promptly thereafter.