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DANAHER CORPORATION

(DHR)
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Danaher to buy Nobel Biocare for $2.2 billion

09/15/2014 | 07:19am EDT
Logo of Swiss medical device maker Nobel Biocare is pictured at the company's headquarters in Zurich

ZURICH (Reuters) - U.S. healthcare group Danaher Corp (>> Danaher Corporation) is to buy Switzerland's Nobel Biocare Holding AG (>> Nobel Biocare Holding AG) for an agreed $2.2 billion (1.35 billion pounds) to become the world's biggest player in a dental implants market benefiting from a recovering global economy.

ZURICH (Reuters) - U.S. healthcare group Danaher Corp (>> Danaher Corporation) is to buy Switzerland's Nobel Biocare Holding AG (>> Nobel Biocare Holding AG) for an agreed $2.2 billion (1.35 billion pounds) to become the world's biggest player in a dental implants market benefiting from a recovering global economy.

Danaher said on Monday it would pay 17.10 Swiss francs per Nobel Biocare share in cash, about 23 percent above Nobel Biocare's closing price on July 28, the day before the Swiss firm said it was in talks with potential buyers.

However, Nobel Biocare shares fell as much as 6 percent after analysts had predicted the company could fetch over 20 francs per share.

"From my side, it doesn’t fill me with that much enthusiasm. But I don’t expect there will be a second bid," Sebastien Buch, a portfolio manager at Union Investment which owns roughly 3 percent of Nobel Biocare’s shares, told Reuters.

Danaher is a leading provider of dental equipment, but only a small player in the fragmented dental implant market after its acquisition of low-cost manufacturer Implant Direct.

The purchase of Nobel Biocare, the world's No.2 dental implants maker, will bring Danaher a premium range of implants and boost its dental business to sales of around $3 billion.

Vontobel analysts forecast the global dental implants market is set to double to $6 billion by 2025, helped by recovering Western economies and rising incomes in developing countries.

"This combination will help us build a strong platform for future growth," said Henk van Duijnhoven, Senior Vice President of Danaher's Dental segment in a statement.

Fellow dental implant players such as Henry Schein (>> Henry Schein, Inc.) and Dentsply (>> DENTSPLY International Inc.) had been cited as possible bidders for Nobel Biocare, while the company had reportedly also attracted interest from buyout group EQT Partners.

Analysts at Berenberg said it was "by no means a certainty" that Nobel Biocare's shareholders would agree to tender their shares at Danaher's price, adding it was possible that other potential suitors could enter the fray with a higher offer.

The deal, recommended by Nobel Biocare's board, requires the acceptance of 67 percent of Nobel Biocare's shareholders.

But other analysts said the price was fair and counter bids looked unlikely. Swiss rival Straumann (>> Straumann Holding AG) ruled out interest in Nobel Biocare last month, while Zimmer (>> Zimmer Holdings, Inc.) is busy with its purchase of Biomet Inc for more than $13 billion.

"Nobel has run an extensive sales process and we believe that Nobel is less attractive for private equity in light of its weak cash flow and no synergy opportunities," said Bank of America Merrill Lynch analyst Ed Ridley-Day.

MEDTECH M&A

The Nobel Biocare deal follows on from a wave of mergers among medical supplies makers this year, including Medtronic Inc's (>> Medtronic, Inc.) $42.9 billion deal to buy Dublin-based Covidien Plc (>> Covidien plc) in June.

Like other makers of premium implants, Nobel Biocare has struggled since the financial crisis as cash-strapped consumers, particularly in southern Europe, cut back on pricey dental work which is not generally reimbursed by insurers.

Nobel Biocare's stock is down 80 percent since its all-time high in 2007. The company grappled with years of sliding sales and dwindling market share as it faced competition from a growing number of so-called "value" players.

But signs have grown that a long-awaited turnaround is taking root and the company has notched up five consecutive quarters of revenue growth at constant exchange rates.

Nobel Biocare had sales of 567 million euros (450.81 million pound) and net profit of 42.6 million euros in 2013. It has $556 million of bonds and loans.

Danaher said Nobel Biocare would continue to operate as a standalone company and maintain its own brand and identity.

The deal is expected to be completed in late 2014 or early 2015. Nobel Biocare was advised by Goldman Sachs, while Credit Suisse is acting as financial adviser and offer manager.

At 1045 GMT, Nobel Biocare shares were down 5.5 percent at 17.05 Swiss francs.

(Additional reporting by Supriya Kurane in Bangalore; Editing by Louise Heavens and Mark Potter)

By Caroline Copley


ę Reuters 2014
Stocks mentioned in the article
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BANK OF AMERICA CORPORATION 1.14% 38.13 Delayed Quote.25.80%
DANAHER CORPORATION -0.37% 290.18 Delayed Quote.30.63%
HENRY SCHEIN, INC. 0.01% 77.37 Delayed Quote.15.72%
LETS HOLDINGS GROUP CO., LTD. -1.35% 6.57 End-of-day quote.-15.55%
NOBEL BIOCARE HOLDING AG 0.00%End-of-day quote.0.00%
STRAUMANN HOLDING AG 0.58% 1635.5 Delayed Quote.57.68%
THE GOLDMAN SACHS GROUP, INC. 0.49% 375.9 Delayed Quote.42.54%
VONTOBEL HOLDING AG 1.09% 78.85 Delayed Quote.11.11%
ZIMMER BIOMET HOLDINGS, INC. -0.20% 159.65 Delayed Quote.3.61%
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Financials (USD)
Sales 2021 28 684 M - -
Net income 2021 6 181 M - -
Net Debt 2021 9 928 M - -
P/E ratio 2021 35,5x
Yield 2021 0,29%
Capitalization 207 B 207 B -
EV / Sales 2021 7,57x
EV / Sales 2022 7,09x
Nbr of Employees 68 000
Free-Float 74,2%
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Number of Analysts 23
Last Close Price 290,18 $
Average target price 313,63 $
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Rainer M. Blair President, Chief Executive Officer & Director
Matthew R. McGrew Chief Financial Officer & Executive Vice President
Steven M. Rales Chairman
Jose Carlos GutiÚrrez Ramos Chief Science Officer & Senior Vice President
Brian W. Ellis Senior Vice President & General Counsel
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