More than five years ago, Floyd Pickrell Jr. presided over the birth of Sybron Dental Specialties Inc. in a spinoff valued at $540 million.
Today, Pickrell is on the verge of selling the Newport Beach-based dental products maker for $2 billion to Washington, D.C.-based Danaher Corp., a diverse maker of bar code scanners, tools, electric motors and other industrial gear.
Antitrust regulators last week signed off on the deal.
The buy, set to close during the quarter, caps a nice run as a public company for Sybron. The company’s shares have tripled since 2001 with a market value of $1.9 billion last week.
The gain is on par with that of key rival Dentsply International Inc. of Pennsylvania. Both companies easily bested Standard & Poor’s 500, which is down 2% since 2000, and the S & P; Healthcare index, which is up about 4% in the past few years.
Pickrell, Sybron’s chief executive, is set to see a sizable payday in the deal. He owns about 947,000 shares of Sybron, or about 2% of the company.
At Danaher’s buyout price of $47 a share, Pickrell’s stake is worth about $44.5 million, before factoring in the costs of exercising options.
Of course, after the deal closes Danaher may not need a chief executive at Sybron, which is set to be a Danaher subsidiary.
Pickrell himself declined to comment for this story, including on questions about whether he would leave Sybron after the deal closes.
Danaher officials haven’t directly addressed questions about the future of Sybron’s senior management or its plans for job cuts after the buy closes.
Lawrence Culp Jr., Danaher’s chief executive, said on a conference call that he’d leave it “to Floyd and the team to talk about that in due course.”
“But obviously, this is a team,Floyd and the rest of the operating group,that has done remarkable things with this business over time and we’re looking forward to having them on the Danaher team going forward,” Culp said.
Should Pickrell leave, terms call for him to get more than $4.7 million in severance if he’s “terminated without cause or resigns for good reason,” according to a Securities and Exchange Commission filing. Pickrell also is set to collect a $1.3 million performance bonus if he leaves.
Layoff Outlook
Some duplicated corporate jobs could be cut, said Derek Leckow, an analyst who follows Sybron for Barrington Research in Chicago. But Leckow said he doesn’t see heavy culling by Danaher.
“My sense is that Danaher doesn’t have a presence in manufacturing dental consumables and that (it’s buying Sybron) to gain capacity, intellectual property and the people.”
Sybron employs 4,200 people in all, including 425 in Orange County, most at a plant in Orange.
The company has two big units: Kerr Dental, which makes restorative dental materials and instruments used in root canals, and Ormco, a maker of orthodontic supplies such as bracket braces, bands, crowns and elastics.
“The key brand here is Ormco,” Danaher’s Culp said. “We have been assessing the $9 billion dental consumables market for several years, well before we completed our first dental equipment acquisition in 2004. We find it very attractive.”
Danaher bought Germany’s KaVo, a dental equipment maker, in 2004.
Sybron has a third line of business: dental implants. Sybron got into implants by way of two acquisitions in the past two years.
Benefiting From Size
The company “should benefit from being part of a larger corporate entity,” said Frank Pinkerton, an analyst with Banc of America Securities.
Danaher’s acquisition of Sybron has the potential to change the larger dental products landscape, according to Pinkerton.
The deal creates a bigger rival for industry leader Dentsply. And Danaher with Sybron will be “the first large player in both the dental equipment and consumables market,” Pinkerton wrote.
Danaher beat out a couple of unnamed competitors in the race to acquire Sybron, according to Sybron’s SEC filing.
Sybron was tabbed as a potential acquisition several years ago after Danaher started eyeing the market for dental supplies known as consumables, which dentists buy on a regular basis.
Danaher is best known as the maker of Craftsman tools sold at Sears stores.
The company looked at buying Sybron in late 2003 and early 2004. The companies couldn’t come to terms and stopped talks in April 2004.
Two months ago, Culp and Pickrell arranged to meet at a trade fair in Chicago to discuss “the strategic and financial logic of a combination of Danaher and Sybron.”
Sybron was created through a spinoff from Apogent Technologies Inc., now part of New Hampshire-based Fisher Scientific International Inc.
