Dental products supplier Patterson to go private in $4.1 bln deal

Industry:    1 week ago

Patterson Companies has agreed to be taken private for about $4.1 billion by health investment firm Patient Square Capital, the animal and dental health equipment supplier said on Wednesday.

The $31.35 per share offer represents a premium of 35.7% to the stock’s last close. Shares were trading at $31 after markets opened.

Patient Square, which has about $11 billion in assets under management, was part of a consortium that took contract research service provider Syneos Health private in 2023.

Evercore ISI analyst Elizabeth Anderson said the investment firm’s history of turning around troubled assets such as Syneos added additional credibility to the offer.

The agreement includes a 40-day period that permits the Patterson board and its advisors to seek alternative acquisition proposals.

“While there’s a 40-day go-shop in this deal, we’re doubtful a meaningfully higher alternative deal will emerge,” said Baird analyst Jeff Johnson.

Earlier this month, Minnesota-based Patterson said it was evaluating strategic alternatives, including a sale or merger, after trimming its annual profit forecast.

Analysts have highlighted easing demand for dental products and surgeries as inflation-weary customers prioritize the purchase of essential products.

The company’s animal health segment brings in more than 60% of its revenue and distributes vaccines and prescription diets, among others. Its dental segment includes the supply of instruments used in clinics.

Shares were down more than 18% this year through Tuesday, as the company struggled with lower sales and the disruption from the hack at Change Healthcare, health insurer UnitedHealth Group’s technology unit.

The hack in February had a knock-on effect on players across the U.S. healthcare system, as disruptions triggered by the attack have impacted electronic pharmacy refills and insurance transactions.

The company said in August it would take cost and management actions to offset the squeeze on its business.

Patterson said on Wednesday the deal is expected to close in the fourth quarter of its fiscal 2025.

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