Nobel Biocare sold to Danaher in $2.2bn deal

November 2014 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

The Danaher Corporation has agreed to acquire Nobel Biocare Holding AG, the world’s second largest manufacturer of dental implants, in a deal worth around $2.2bn.

Under the terms of the deal, Nobel’s shareholders will receive $18.55 in cash per share for their stake in the company. The agreed price for Nobel is 23 percent above Nobel’s closing price on 28 July, the day before the Swiss firm said it was in talks with potential buyers. Both companies expect the deal to be completed by late 2014 or early 2015, provided it wins the approval of regulators and Nobel’s shareholders.

The deal, announced on 15 September, will see Danaher become the world’s biggest dental implants manufacturer having benefited in recent years from a growing demand for cosmetic dentistry. Although the financial crisis and economic downturn had a negative effect on the global dental market, growing consumer confidence in the US and Europe of late has provided a fillip. According to Danaher’s projections, the high-end of the implant market is likely to grow between 3 and 5 percent annually in the years to come. The acquisition of Nobel and its premium range of implants will provide a significant boost to Danaher; indeed, Nobel is likely to augment the company’s sales considerably. Nobel generated revenue of approximately $750m in 2013 and dominates the premium-price segment of the implant market. Danaher’s dental business, which includes implants, orthodontic braces and other dental equipment, generated an operating profit of $305m in 2013 on revenue of $2.1bn, roughly 11 percent of the company’s total revenue of $19.1bn. Once the deal for Nobel has been completed, Danaher expects to achieve annual sales of around $3bn.

Roughly 20 percent of Noble’s revenue is generated in the emerging markets of China, Eastern Europe and Latin America. A further 40 percent is generated in the US. In a joint statement Rolf Watter, chairman of the Nobel board of directors, noted “the company announced in July that it had been approached by third parties with a potential interest in acquiring the company. The company retained a financial advisor to evaluate interest from potential acquirers. The Nobel Biocare Board of Directors has undertaken a careful review of the terms and conditions of the Danaher offer. We believe that the offer recognises the strategic value of Nobel Biocare and delivers a considerable cash premium to our shareholders. We view Danaher as the ideal strategic partner for the sustainable development of Nobel Biocare. The Board has determined that Danaher’s offer is in the best interests of the company, our shareholders, employees, clients, suppliers and customers.”

Nobel’s board has unanimously recommended that the company’s shareholders accept the offer. In the joint statement released by the two firms, Danaher noted that once the deal has been completed the company will allow Nobel to continue to operate as a standalone business within its wider dental platform. Nobel will also maintain its production sites and headquarters in Switzerland. “Nobel Biocare’s leadership team has done an outstanding job creating a strong platform for future growth over the last couple of years,” said Henk van Duijnhoven, senior vice president of Danaher’s dental platform. “Our team is excited to work with the Nobel Biocare team to build on their efforts toward continued innovation, growth and business improvement. We look forward to welcoming all Nobel Biocare associates, customers and key opinion leaders to the Danaher dental team.”

Danaher’s decision to acquire Nobel is another example of increasing consolidation in the medical supplies manufacturing sector. 2014 has seen a number of deals announced, including Medtronic Inc’s $42bn acquisition of Irish firm Covidien plc and Zimmer Holdings Inc’s $13bn purchase of Biomet Inc. It is believed that Danaher beat competition from a number of other firms operating within the dental implant sector in order to agree a deal for Nobel.

Richard Summerfield