Peak Rock Capital takes a bite out of Steris with $787M dental business deal

Steris has signed a pact to sell its dentistry business to the private equity firm Peak Rock Capital, through a $787.5 million transaction aimed at helping to pay down the company’s debts left from its previous multi-billion-dollar M&A outlays.

Collectively known as the HuFriedyGroup, the 1,500-employee international division manufactures dental instruments, infection prevention products and patient sedation systems, including the long-time brands of Hu-Friedy, Crosstex, Omnia and Accutron.

Steris said it expects to close the deal by the end of June. During the 2023 calendar year, the company said the Chicago-based enterprise brought in $407 million in revenues and $86 million in operating income.

“Since acquiring our dental segment through the Cantel acquisition, we have focused on deploying lean manufacturing methods to drive operating efficiencies,” Steris President and CEO Dan Carestio said in a statement.

“After a thorough review of strategic alternatives, we have decided to divest our dental segment to allow us to focus on our customers within our core markets in healthcare, pharma and medtech who can most benefit from our full portfolio of products and services,” Carestio added. “We are confident this business will do well with the investment and support of Peak Rock Capital.”

For its part, Peak Rock said it believes its new acquisition will serve as a base for future deals.

“We look forward to partnering with the management team and employees to drive further new product innovation and accelerated organic growth,” said Peak Rock Managing Director Spencer Moore. “We’re also excited to help the team pursue complimentary acquisitions to extend the product and brand portfolio.”

The transaction is structured as an equity sale, with Steris offered the opportunity to receive an additional earnout of up to $12.5 million based on the dental segment’s revenues in its 2025 fiscal year, which began April 1.

“Peak Rock has a long track record of helping companies accelerate growth and a shared vision of supporting our employees in providing leading products to the dental industry,” said HuFriedyGroup President Andy Xilas. “Their ability to constructively navigate the complexities of a carve-out transaction gives us great confidence as we work to complete the separation from Steris.”

In February, Steris’ quarterly financial report showed that dental sales declined 5% in the final three months of 2023, to $97.9 million versus $103.6 million, reflecting lower volumes compared to the same period the year prior. Still, the company upped its fiscal 2024 revenue forecast based on the performance of its healthcare outfit, boosted by its $540 million purchase of surgical instruments from BD in 2023.