Nobel Biocare Confirms Talks on Sale of Dental-Implant Maker

Jul 30, 2014 6:02 am ET

(Updates with today’s shares in sixth and potential price and buyers in seventh paragraph.)

July 30 (Bloomberg) -- Nobel Biocare Holding AG, the world’s second-biggest maker of dental implants, is in discussions about a possible sale of the company as interest in medical-device companies increases.

The talks are at an early stage and may not result in a transaction, Nobel said in a statement yesterday. The company issued the statement in response to a Bloomberg News report that it was working with Goldman Sachs Group Inc. on a potential transaction. Nobel has a market value of 1.92 billion Swiss francs ($2.12 billion).

“The company confirms that it has been approached by third parties with a potential interest in acquiring the company,” according to the statement. Discussions “are at a very early stage and may or may not result in any transaction. The company will provide an update, if and when appropriate.”

Private-equity firms and companies in the industry have shown interest in the Glattbrugg, Switzerland-based company, people familiar with the matter said.

Nobel Biocare has explored a sale on and off again for some time. Private-equity firms have held preliminary talks with the company, one of the people said. Some buyout firms concluded that Nobel Biocare is too expensive to buy, the people said. The company is about valued at about 27.9 times this year’s estimated earnings, compared with an average of 20.8 times for European medical-equipment companies with market values of $1 billion or more, according to Bloomberg data.

Medical Deals

Nobel Biocare was down 1.3 percent to 15.90 francs as of 11:40 a.m. in Zurich trading today. The stock jumped 16 percent to 16 francs yesterday, its highest closing price since 2011.

The company could be sold for 16 to 18 francs a share, according to estimates from Lisa Bedell Clive, a London-based analyst at Sanford C. Bernstein & Co. Potential buyers include Swiss rival Straumann Holding AG, Johnson & Johnson, Medtronic Inc., Dentsply International Inc., Zimmer Holdings Inc., Henry Schein Inc., Sirona Dental Systems Inc., and 3M Co., according to the note.

Mergers among makers of medical supplies and instruments have more than doubled this year compared to the same period in 2013, according to data compiled by Bloomberg, as companies band together to provide a comprehensive set of products and services to hospitals.

Last month, Medtronic agreed to pay $42.9 billion for Dublin-based Covidien Plc, to help it compete with Johnson & Johnson, the No. 1 medical device company. In April, Zimmer said it agreed to buy Biomet Inc. for $13.4 billion.

A representative for Goldman Sachs declined to comment.

Potential suitors for Nobel would be buying a company whose sales and stock price still haven’t recovered from the recession and financial crisis that began in 2008. As unemployment soared, people cut back on implants, which often aren’t covered by insurance.

The stock is down more than 80 percent from the record set in 2007, underperforming the Swiss Performance Index, which has added more than 16 percent over the same period.

Industrial Logic

Nobel forecast in February that revenue this year will increase less than some analysts predicted, though in April it reported its fourth straight quarter of sales growth at constant exchange rates. Revenue for the first quarter was 138.8 million euros ($186 million) and net income was 12.5 million euros. The company this month announced that two executive committee members are leaving.

Nobel had about 17 percent of the implant market in 2013, just behind Straumann of Basel, Switzerland, with 18 percent, according to estimates by Sanford C. Bernstein. Competitors also include Zimmer, Biomet and Dentsply.

“Besides industrial logic, we also see the opportunity to create efficiencies from aligning Nobel Biocare and Straumann’s cost structures as supportive of a potential merger,” according to a July 1 report from Credit Suisse Group AG analysts led by Christoph Gretler, who explored the dental industry in light of M&A activity in medical devices.

--With assistance from Phil Serafino in Paris, Dinesh Nair in Dubai and Allison Connolly in London.