In a bid to strengthen its dental and technology lines of business in Europe, Henry Schein, Inc. (HSIC) forged an agreement to fully acquire five healthcare businesses operating in three European countries, from Arseus NV. Together, these five businesses of Belgium-based Arseus represent annual sales of approximately $97 million (€70 million).
The deal is valued at $68.07 million (€50 million). Henry Schein expects the acquisition to be dilutive to its earnings per share by approximately 3 cents in 2014. The company expects to seal the transaction within the next 90 days.
The businesses which are to be acquired by HSIC include Logiciel Julie, a French dental practice management software company with more than 8,000 installed systems and annual sales of approximately $7.9 million (€5.7 million), and four other distributors of dental equipments, practices, related consumables and IT solutions.
Among the four other companies, the first one is Arcade Dentaire, again a French based distributor of dental equipment, related consumables and IT solutions. Arcade Dentaire has exclusive distributorship rights for a number of premier dental manufacturers in the region, including Sirona. It has annual sales of approximately $11.0 million (€8 million).
The second one is Netherlands-based Arseus Dental Solutions BV, with annual revenues of $14.1 million (€10.2 million). The other two are Arseus Dental Solutions N.V. of Belgium with annual revenues of $10.9 million (€7.9 million), and Arseus Lab, a leading distributor of specialist products to dental laboratories in Benelux and France, with annual sales of approximately $52.7 million (€38.2 million).
Following the announcement, HSIC revised its 2014 financial guidance expecting diluted EPS to range between $5.29 and $5.39, representing a rise of 8% to 10% from the midpoint of the 2013 guidance range. The Zacks Consensus Estimate for 2014 is pegged at $5.41 per share.
Despite the austerity measures plaguing Europe, Henry Schein is optimistic about this acquisition deal. The company looks forward to gain access to the top manufacturers in the region, through the wide network tapped by the four distributor companies of Arseus.
HSIC also expects to benefit from the superior brand value and strong market presence enjoyed by the Arseus businesses in the European dental market. It expects the deal to equip it better to serve customers with new, innovative and integrated dental solutions.
Currently, Henry Schein carries a Zacks Rank #3 (Hold). Investors interested in the medical dental supplies industry can look at better-ranked stocks like Align Technology Inc. (ALGN), Cardinal Health, Inc. (CAH) and Alphatec Holdings, Inc. (ATEC), each carrying a Zacks Rank #1 (Strong Buy).