Cantel to acquire Hu-Friedy
LITTLE FALLS, N.J. and CHICAGO, Ill., USA: Cantel Medical Corp., described as a global leader in instrument reprocessing and innovative infection prevention products and services, has announced that it has entered into a definitive agreement to acquire privately held Hu-Friedy Mfg. Co., a 111-year-old global leading manufacturer of instruments and instrument reprocessing workflow systems serving the dental industry.
According to Cantel, this combination creates a provider of comprehensive infection prevention, instrument and instrument management solutions to optimize dental practitioners’ need for superior clinical performance and best-in-class infection prevention practices. Cantel is acquiring Hu-Friedy for $725 million in upfront cash and stock consideration, and up to $50 million in earnout payments payable in cash and stock conditional on the achievement of commercial milestones in the first eighteen months after closing, the company said. The transaction structure is anticipated to result in tax benefits to Cantel presently valued at more than $100 million, which would result in a net purchase price of $625 million for the upfront consideration and up to approximately $675 million in consideration including potential earnout payments.
Combining Hu-Friedy’s position in dental instrumentation and instrument management systems with Cantel’s dental infection prevention consumables meaningfully accelerates Cantel’s strategy to be the leading global provider of innovative infection prevention and reprocessing workflow solutions and education across its key end markets, the company said. During the 12-month period ended May 31, 2019, Hu-Friedy generated approximately $214 million in revenue, and adjusted EBITDA of approximately $48 million.
“The combination of our two dental businesses provides a clear and immediate opportunity to become the leading provider of a ‘Complete Circle of Protection’ offering for instrument reprocessing workflow and infection prevention and compliance solutions in the dental industry,” said George Fotiades, president and chief executive officer of Cantel. “By bringing together our highly complementary dental portfolios, we will create a business that is uniquely positioned to address the most critical workflow needs of our customers while improving patient care. Hu-Friedy brings us the scale, commercial capabilities and portfolio breadth to enable our dental business to be a significant driver of long-term profitable growth for Cantel.”
“We are excited to join forces with Cantel and are looking forward to the opportunities this combination will bring for our customers, employees and other stakeholders,” said Ron Saslow, chairman and chief executive officer of Hu-Friedy. “As a leader in dental instrumentation and instrument management solutions, Hu-Friedy’s combination with the Cantel portfolio of leading infection prevention dental consumables is a perfect match to further enhance our ability to serve our dental customers.”
Hu-Friedy has built a position as a leader in the dental instruments and instrument management system (“IMS”) categories, with a 90 percent branded portfolio, enjoying nearly 100 percent brand awareness among dentists and hygienists, the company said.
Hu-Friedy has a large and sophisticated sales and customer care team, supported by a strong marketing organization using industry-leading data analytics, the company said. This will enhance Cantel’s commercial and customer engagement capabilities within the dental industry, which is expected to enable long-term growth. In addition, Hu-Friedy’s education and training offerings, well-established presence in dental schools and continued work and engagement with key opinion leaders will enable the combined business to provide a differentiated education and broad solution-based offering to the dental industry, the company said.
Ron Saslow and Ken Serota, president of Hu-Friedy, will lead the combined dental business post-closing. Gary Steinberg, who has successfully built the Cantel dental division since the acquisition of Crosstex, will assist in the post-close transition and integration of these two businesses and will retire at the end of the calendar year.