VCBeat (WeChat ID: vcbeat) has learned that following the 2015 spin-off of its professional instrumentation and industrial technologies businesses into Fortive, Danaher is embarking on another major divestiture. On July 19, Danaher issued an announcement stating its intention to spin off its dental segment into an independent publicly traded company (“DentalCo”), with the transaction expected to be completed in the second half of 2019.

According to available information, Danaher Corporation (NYSE: DHR) was founded in 1969, originally as Diversified Mortgage Investors, Inc., and adopted its current name in 1984. Headquartered in Washington, D.C., USA, it is a global leader in the design and manufacture of science and technology innovation products and services. Its business comprises four platforms: Life Sciences, Diagnostics, Dental, and Environmental & Applied Solutions.

Life Sciences and Diagnostics are Danaher’s two largest business segments, offering solutions spanning from upstream R&D to downstream manufacturing. Upon completion of the spin-off, the existing Nobel Biocare, Ormco, and KaVo Kerr brands within the Dental segment will form the new DentalCo.

Danaher’s dental business generated nearly $3 billion in revenue in 2017,As ofQ2 2018, Net Income$673 million，+20.0% year-on-year,With over 12,000 employees worldwide.

“This is an important step toward unlocking the greater potential of Danaher and its dental business,”Thomas P. Joyce, President and Chief Executive Officer of Danaher, stated,“We are committed to delivering maximized long-term value to all shareholders, customers, and employees. We believe that, as an independent company, DentalCo can achieve more effective integrated development, drive sustained margin expansion, place greater emphasis on new investment opportunities, and support robust future earnings growth through strategic investments and mergers and acquisitions.”

Amir Aghdaei will become President and Chief Executive Officer of DentalCo upon closing of the transaction and will join DentalCo’s Board of Directors. Mr. Aghdaei joined Danaher in 2008 and currently serves as Group Executive, overseeing the dental platform.

In addition, Dan Daniel, Executive Vice President of Danaher, and Daniel Raskas, Senior Vice President of Corporate Development, will join the DentalCo board of directors while retaining their positions at Danaher. Furthermore, Dan Comas, Executive Vice President and Chief Financial Officer of Danaher, will serve as a special advisor to DentalCo.

Mr. Aghdaei stated, “As an independent publicly listed company, I am honored to lead our dental business. We will continue to uphold Danaher’s shared DBS culture, delivering best-in-class innovation, service, and solutions to our customers. This spin-off represents a tremendous opportunity for the dental business, and I look forward to leading the team through this important milestone.”

A key milestone in Danaher’s development history was the acquisition of KaVo. Founded in 1909, KaVo is a German-headquartered leader in the specialized manufacturing of dental instruments.

In 2004, KaVo was acquired in its entirety by the Danaher Corporation, becoming a company under Danaher’s Dental Products platform. In 2006, Sybron International was acquired by Danaher, and KaVo Kerr became the world’s leading manufacturer of dental equipment and consumables, accounting for the largest share of Danaher’s dental business.

In 2017, Danaher’s dental business generated $2.819 billion in revenue, with the majority contributed by KaVo Kerr, ranking second globally in the dental sector, only behind the merged Dentsply Sirona.

Although KaVo Kerr, like Dentsply Sirona, provides one-stop dental solutions, its strategic focus differs slightly. KaVo Kerr places significant emphasis on the development of its cosmetic dentistry business, recognizing its substantial market potential. By integrating cosmetic dental products with implant surgical products, the company has established a comprehensive equipment and diagnostic system.

In 2014, Danaher acquired Nobel Biocare, the second-largest player in the dental implant sector, for $2.2 billion, significantly strengthening Danaher’s dental implant business among dental companies. The acquisition of Nobel Biocare brought additional revenue and profitability opportunities, with the revenue impact reflected in 2015, resulting in a 24.8% year-over-year revenue growth in 2015.

In 2015, revenue from the dental care existing business remained flat compared to the previous year. Rising demand for dental treatment equipment and consumables, particularly in China and other high-growth markets, offset the inventory reduction in imaging products—especially within North American distribution channels—as well as the sales decline in Western Europe.

In 2016, the dental business posted low single-digit growth, driven primarily by increased sales of dental equipment, with emerging markets showing significant momentum; partial growth in the North American market was offset by weak demand in Western Europe.

In 2017, sales declined in North America and Western Europe due to inventory adjustments by distributors; however, high-growth markets such as China and Russia offset the reduced demand in North America and Western Europe, resulting in a 1.2% increase in dental business revenue.

In 2016, dental consumables and equipment accounted for a revenue ratio of 7:3 in Danaher’s dental business, indicating that the company’s dental segment primarily focuses on consumables.

North America is the largest market for Danaher’s dental business, accounting for 51% of the group’s total revenue, followed by Western Europe at 23%. Although emerging markets account for only 19%, the dental business is experiencing strong growth in China and other emerging markets. Demand for implant solutions is increasing, particularly in China and North America. In the orthodontic products segment, demand has grown significantly in China and Russia.

In 2017, Danaher’s dental business generated $2.819 billion in revenue, a year-on-year increase of 1.2%. Slight price declines for products had a significant impact on sales in the first half of 2017. The regional breakdown of dental product sales was as follows: North America accounted for 49%, Europe 30%, Asia/Australia 15%, and all other regions 6%.

From a geographical perspective, the primary growth drivers in 2017 were China and Russia; however, declining demand in the United States and Western Europe resulted in negligible overall sales growth.

In terms of professional consumables, dental implants and orthodontic products continued to experience robust growth, driven by strong demand in high-growth markets such as China and Russia, as well as in North America. For core dental equipment, demand remained strong in high-growth markets; however, sales remained flat due to declining demand in the United States and Western Europe. In North America, this was subsequently affected by adjustments in net sales of dental equipment by manufacturers. Regarding consumables, the North American dental consumables market continued to be negatively impacted by inventory adjustments among distributors and manufacturers.

The following is the main development history:

1. In 1891, Kerr Corporation (later incorporated into Sybron Corporation) was established, dedicated to the research, development, and production of dental consumables, becoming a leading brand in restorative dentistry;

2. In 1909, KaVo was founded by Mr. Alois Kaltenbach in Berlin-Steglitz, Germany, and quickly grew to become one of the leaders in the dental equipment market;

3. In 1965, the 1025 dental chair became KaVo’s first dental chair that allowed patients to lie down during treatment, thereby sparking a revolution in ergonomics within the field of dentistry;

4. In 1978, Shengbang's Dental Products Division was officially established;

5. In 1982, Sybron acquired the dental manufacturing and distribution business of American Hospital Supply Corporation for $90 million, integrating the Ormco brand into Sybron and completing its orthodontic product portfolio;

6. In 1992, Kerr launched the world’s first resin adhesive containing inorganic fillers, establishing the gold standard for total-etch adhesives; it remains the most popular adhesive in European and American markets to this day.

7. In 1995, Shengbang acquired Demetron to expand its product line of curing lights;

8. In 2001, Shengbang acquired HaweNeos, strengthening its supply of preventive consumables;

9. In 2002, KaVo launched its first Everest® CAD/CAM system;

10. In 2004, KaVo was acquired by Danaher for $425 million, laying the foundation for the future dental platform of KaVo Kerr and enabling the integration of Gendex dental panoramic X-ray machines into the KaVo product portfolio;

11. In 2006, Danaher acquired Sybron for $2 billion to expand its market share in dental equipment and consumables, leading to the establishment of KaVo Sybron;

12. In 2008, Shengbang launched the world’s first twisted-file rotary nickel-titanium instrumentation system, TF, offering unprecedented safety and efficiency;

13. In 2009, KaVo Kerr acquired dental instrument products and the Soredex imaging brand;

14. In 2010, KaVaShengBang acquired Implant Direct, bolstering its weak implant business;

15. In 2012, KaVo Kerr acquired DUX Dental and Vettec to expand its portfolio of dental solutions.

References:

Global Dental Giant KaVo Sybron—Oral Vision

http://m.instrument.com.cn

http://investors.danaher.com/2018-07-19-Danaher-Announces-Plan-To-Spin-Off-Dental-Business-Into-An-Independent-Publicly-Traded-Company