Danaher to Buy Implant Maker Nobel for $2.2 Billion

By Thomas Mulier

Danaher Corp. (DHR) agreed to acquire Nobel Biocare Holding AG (NOBN) for $2.2 billion after the Swiss maker of dental implants searched for a buyer amid a wave of consolidation in the health industry.
Danaher will pay 17.10 Swiss francs a share in cash, and the purchase will make it the world’s largest maker of such implants, the Washington-based company said in a statement today. While 5.5 percent less than the closing price Sept. 12, the offer is 23 percent higher than Nobel Biocare’s closing price July 28, the day before Bloomberg News reported that the Glattbrugg-based company was considering a sale. The stock fell as much as 6.1 percent.
Danaher, an industrial conglomerate with products ranging from laboratory equipment to water-treatment chemicals, is buying a business whose sales still haven’t recovered from the recession and financial crisis that began in 2008. After peaking at 90.75 francs in
2007, Nobel Biocare has traded below 20 francs for more than three years. As unemployment soared, people cut back on implants, which often aren’t covered by insurance.
“Nobel had a very rich valuation, so the upside was limited,” said Oliver Metzger, an analyst at Commerzbank AG in Frankfurt. He said he doesn’t expect rival bids. “For Nobel Biocare shareholders, it’s still an attractive price compared with the share price of recent years.”

Inviting Bids

Nobel Biocare was initially approached by Swedish buyout firm EQT with an offer of about 17 francs a share, Bloomberg News reported in August, citing people with knowledge of the matter who didn’t want to be identified. The offer prompted the company and its adviser Goldman Sachs Group Inc. (GS) to invite other bids as it sought a higher price, the people said.
Danaher said its annual sales from the dental industry will approach $3 billion after the purchase, giving it an “unmatched position” in dental implants as Nobel Biocare will expand the company’s presence in the premium segment of the market.
Nobel Biocare fell 5.8 percent to 17.05 francs at 12:20 p.m. in Zurich. The purchase values the company, including net debt, at about 17.4 times earnings before interest, tax, depreciation and amortization, compared with a median valuation of 14.4 times for comparable deals, according to data compiled by Bloomberg.
Danaher fell 0.5 percent to close at $76.88 in New York on Sept. 12, giving the company a market value of $53.9 billion.

Market Share

Nobel had about 17 percent of the implant market in 2013, just behind Straumann Holding AG (STMN) of Basel, Switzerland, with 18 percent, according to estimates by Sanford C. Bernstein & Co. Competitors also include Zimmer Holdings Inc., Biomet Inc. and Dentsply International Inc. Zimmer agreed to buy Biomet in April.
Straumann looked at Nobel Biocare and found it didn’t fit for strategic reasons, Chief Executive Officer Marco Gadola said Aug. 26.
Danaher plans to begin a tender offer for Nobel Biocare around Oct. 16, and expects to complete the purchase late this year or in early 2015, the company said. Suha Demokan, a spokesman for Nobel Biocare, said Chief Executive Officer Richard Laube wouldn’t comment.
The purchase brings the value of announced acquisitions of health-products companies this year to $81 billion, led by Medtronic Inc.’s agreement to buy Covidien Plc for $42.9 billion. The value of deals is more than double the amount in the same period last year.
While acquirers in many of this year’s deals plan to lower their tax bills by moving their tax domicile outside of the U.S., Danaher’s purchase of Nobel Biocare isn’t a so-called tax inversion.