Leading dental products maker DENTSPLY International (XRAY) has wrapped up its acquisition of Sweden-based Astra Tech, the dental implant division of multinational drug major AstraZeneca PLC (AZN), for $1.8 billion in cash. This follows the recent regulatory clearance for the deal which was announced in June 2011. The company has financed the purchase with cash, commercial paper and long-term debt.
Astra Tech, with annual sales of $535 million, is a leading provider of dental implants and consumable medical devices in the urology and surgery markets. The entity offers a comprehensive suite of dental implants and abutments through its Astra Tech Dental unit.
The acquisition marks the integration of two of the fastest growing dental implant businesses, creating the third-largest player in this market. Besides reinforcing its leadership in the global dental market and broadening its product range, the acquisition enables DENTSPLY to tap new markets, such as surgical and urological consumable medical devices, for growth.
DENTSPLY envisions the acquisition to contribute roughly $200 million to its revenues in 2011 and $600 million annually afterwards. Moreover, the transaction is expected to be neutral to modestly accretive to its adjusted earnings in 2011. The acquisition will also provide opportunities for sales and operational synergies. Moreover, the strong cash flows of the integrated entity will offer financial flexibility.
DENTSPLY is poised to grow its share in the dental implant market, driven by a strong product base and significant investment on product/technology innovation and sales/marketing infrastructure.
The company’s diverse product range, significant international presence and new product launches are expected to boost operating metrics over the forthcoming quarters. Moreover, its acquisitions and strategic collaborations will also support growth.
However, DENTSPLY’s domestic operations still remain challenged due to a slow economic recovery and competitive pressure. We also account for the unfavorable impact of the supply chain outage in Japan on the company’s bottom line. We are currently Neutral on the stock, which is supported by a short-term Zacks #3 Rank (Hold).
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DENTSPLY INTL (XRAY): Free Stock Analysis Report
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