Swedish Private Equity company EQT announces this morning that it has sign an agreement to buy Italian company Lima, a producer of orthopaedic implants.
EQT has been following Lima for almost ten years and has apparently been impressed by the strong growth and leadership. Lima is described as a pioneer when it comes to the usage of additive manufacturing, also known as 3D-printing, in order to produce a broad range of orthopaedic implants of titan. For this process, Lima is using Arcam’s systems and has become one of Arcam’s biggest clients.
Another Swedish company that produces implants with the help of Arcam’s additive manufacturing technology is Dentware. Dentware is making dental implants and is also an absolute pioneer in the field. The company is currently merging with Brånemark Integration. In a recent company presentation, CEO Per Dybwad stated that he “would not be surprised if the company was acquired.” We find this statement all the more interesting in the light of today’s news that EQT is buying Lima. If Private Equity players start to pick up implant manufacturers that are using additive manufacturing, Dentware/Brånemark seems like an obvious takeover target as well.
We note that three of Dentware’s competitors are listed on different stock exchanges; Straumann, Dentsply and Zimmer Biomet. These company’s shares trade at 2016 EV/Sales multiples of 3.5 – 5.5x. Applying such multiples to Dentware’s 2017 sales (using the growth rates that management has guided for), would imply an enterprise value of between SEK 183m and SEK 288m, which implies an upside of 91% – 200% compared to current levels (adjusted for new share issue).
Disclaimer: Nordic Investor owns shares in Dentware