Patterson Dental, the dental division of Minnesota-based
distributor of dental, veterinarian and rehabilitation medical
), recently announced the acquisition of Iowa Dental Supply, LLC
(IDS) a full service distributor of dental products. The financial
details of this all-cash transaction were not disclosed.
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Des Moines, Iowa-based IDS caters to Midwestern dental markets such
as Iowa, South Dakota, Nebraska, Illinois and Missouri. Its
long-established reputed sales force comprises 11 field
representatives and equipment specialists.
The acquisition of IDS should boost Patterson Dental's foothold in
the Midwestern U.S. markets and provide a competitive edge to the
company. Patterson competes head-to-head with
Henry Schein Inc.
) in the dental market.
With IDS generating annual revenues of $13 million in 2011,
management at Patterson Dental expect the deal to be modestly
accretive in fiscal 2013. In its first quarter fiscal 2013 results,
Patterson had forecast its earnings to be in the range of
$2.10-$2.16 per share for the fiscal year. The company also
anticipates that the integration process will be quick and
The acquisition is in line with the company's long-term strategy to
grow through internal expansion and acquisitions. Earlier, in April
2012, Patterson Medical acquired Australia-based distributor of
rehabilitation, physiotherapy, and mobility products, Surgical
Synergies Pty Ltd. for $10 million to expand its market size in
Australia and New Zealand.
One of the two largest distributors of dental offerings in North
America, Patterson Dental provides a wide range of consumables,
equipment and software, and value-added services to its customers.
Although patient demand for dental services was tepid at the height
of recession, Patterson should benefit from the gradual recovery in
the dental market.
We also remain upbeat about the prospects of the dental equipment
business (especially CEREC) and the distribution agreement with
Sirona Dental Systems
). The company's focused promotional activities should result in
higher demand for this product category moving ahead.
However, consumable sales from the dental business are expected to
be a drag due to the weak economy, high unemployment rate and lack
of consumer confidence. We currently have a Neutral recommendation
on the stock, which carries a short-term Zacks #3 Rank (Hold