Med tech M&A speculation swirls around Nobel, CareFusion

Dental company Nobel Biocare ($NOBN) is reported to have attracted some suitors in its quest to sell itself, while speculation arises that healthcare analytics and management company CareFusion ($CFN) could be next up for a big M&A deal.

Nobel Biocare hired Goldman Sachs to manage a sale and acknowledged that it's working with possible buyers late in July. Now leaks have started to emerge as to who's in the running to acquire the company, which is the second largest dental implant maker.

Swedish private equity firm EQT Partners and medical device player Danaher ($DHR) are the active suitors at the moment, according to Bloomberg.

Nobel was first approached by EQT with an offer of about CHF 17 a share, which would have valued the company at about 2.1 billion francs ($2.3 billion). That's a 23% premium over the closing price on July 28, the day before Nobel confirmed it was in talks regarding a potential sale. On Aug. 11, the Swiss company's shares were up 2% to CHF 16.25, so investors still seem convinced that a deal worth at least the amount proposed by EQT will get done.

It can be tough for private equity groups to compete against strategic corporate buyers in M&A contests, since the corporate bidders can factor in the potential synergies between two companies to make the math on the deal work while PE firms don't gain those. EQT has raised about €22 billion, is focused on Northern European companies and counts among its portfolio companies medical device companies such as voice and pulmonary rehabilitation company Atos Medical as well as wound care and orthopedics player BSN Medical.

As for the other reported bidder, Danaher has been the subject of much speculation, especially in the wake of the Medtronic ($MDT)-Covidien ($COV) merger bombshell. It's definitely in merger mode but has been focused on smaller deals. Since the beginning of April, Danaher has announced or closed acquisitions worth more than $1 billion, including four deals worth more than $100 million each. Dental is one of its 5 business segments, which also include Test & Measurement; Environmental; Life Sciences & Diagnostics; and Industrial Technologies.

The dental unit was the subject of an entire Danaher investor and analyst meeting on June 24. The dental unit accounted for only 11% of the $19.1 billion in Danaher revenues in 2013. Life sciences and diagnostics were 36%; test and measurement were 18%; and environmental was 17%. The dental business is one of Danaher's newer ones that it's put together over the past decade with more than 24 acquisitions, starting with the 2004 purchase of German dental company Kaltenbach & Voigt (KaVo) for $425 million.

Bloomberg also reported that Pennsylvania-based Dentsply International is also in the running. Acquiring Nobel would could give a buyer a potential tax advantage since they could redomicile in Switzerland, which has relatively favorable corporate tax rates.

CareFusion ​is also rumored to be in the market for acquisitions. The company underscored that it's not out of the running for big M&A but has focused primarily on smaller ones. It expects to spend $240 million in fiscal 2015 on these "tuck-in" acquisitions and has spent about $700 million on M&A recently.

- here is the Bloomberg story on Nobel
- and the Medical Device and Diagnostic Industry take on CareFusion

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