Straumann increases ownership of Neodent to 100%

Straumann has signed an agreement to increase its ownership of Neodent, a Latin American dental implant company, from 49% to 100% in 2015, three years earlier than foreseen in a previous option agreement.

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Straumann has signed an agreement to increase its ownership of Neodent, a Latin American dental implant company, from 49% to 100% in 2015, three years earlier than foreseen in a previous option agreement. The purchase price for the outstanding 51% is BRL 680 million (approximately CHF 210 million [1]; USD 217.7 million) paid in cash to the company’s founding shareholders, Drs. Clemilda de Paula Thomé and Geninho Thomé. The acquisition extends Straumann’s share in implant dentistry.

Neodent specializes primarily in the design, development, and manufacture of dental implants and related prosthetic components. Under the entrepreneurial leadership of its founders, the company has expanded rapidly over the past 22 years and has a leading share of the world’s second largest market for implant dentistry, Brazil (2).

In 2014, the company achieved revenues of BRL 258 million, generated predominantly in its domestic market, where revenue grew 8%. Neodent is highly profitable, and the acquisition will be accretive to Straumann’s reported EBIT margin from 2016.

Straumann acquired 49% of Neodent in 2012 for BRL 549 million (CHF 260 million [3]; USD 175.7 million), with an option to increase to 75% in 2015 and up to 100% by 2018. This option has been renegotiated to enable a full acquisition in 2015.

The initial acquisition marked Straumann’s first step into the value segment of the tooth replacement market. In the meantime, the Straumann Group has established an international value platform (Instradent), which has launched Neodent in the United States, Iberia, and Italy, with additional markets to follow.

On March 1, 2015, when the option to obtain a majority stake in Neodent became exercisable, the Straumann Group began to consolidate Neodent in its financial statements. Previously, the contribution from Neodent was accounted for using the Œequity method (1) and was reported as Œshare of result from associates¹ in the Group’s income statement.

The two companies will be able to merge certain activities. For instance, Straumann’s country organization in Brazil will move to the Neodent facilities in Curitiba, and the two organizations will collaborate to unlock the full potential of the Latin American region. Elsewhere, Straumann will continue to drive the international expansion of Neodent through its Instradent platform.

To ensure continuity, Dr. Geninho Thomé, the co-founder and former CEO of Neodent, will continue with the company as Neodent’s scientific president and as president of the board. He will hand over his current operational responsibilities to the new CEO, Matthias Schupp, who will continue to head Straumann’s Latin American region.

“Neodent is highly successful and expects to sell roughly a million implants this year, underlining its attractive value proposition, solid reputation, and strong commitment to the wellbeing of patients. The company’s success has been driven largely by the entrepreneurial acumen, clinical expertise, and creative vision of Dr. Geninho Thomé, and we are both grateful and excited that he has agreed to continue with us to share his knowledge and experience as we develop new markets, products, and solutions,” commented Marco Gadola, CEO of Straumann.

“Straumann’s investment speaks for the quality of our company, our people, and all that we have achieved together. It is an honor for me personally and everyone at Neodent to be part of the Straumann Group, which we see as the pioneering global leader in implant dentistry. Together, we will contribute significantly to the standard of affordable patient care in Latin America and beyond,” noted Dr. Geninho Thomé.

References
1. Corresponding to an approximate EBITDA multiple of 12
2. iData Research Inc. 2011 and Straumann estimates
3. Corresponding to an approximate EBITDA multiple of 14

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