Sybron Dental Specialties Inc., an Orange-based medical products maker, is set to go public next month as part of a spin-off from Sybron International Corp. of Milwaukee.
Sybron Dental, which has annual sales of more than $400 million, could see a market capitalization of $500 million to $800 million, said Jeff Holmes, an analyst with Tucker Anthony Capital Markets in Milwaukee. The company makes a range of materials and instruments used by dentists, orthodontists and laboratories.
Parent Sybron International, a maker of laboratory products, plans to offer its investors shares in the dental unit on Dec. 11. Sybron Dental is set to trade on the New York Stock Exchange under the symbol SYD.
The spin-off will place Sybron Dental in the middle ranks of Orange County public companies. By sales, Sybron Dental is on par with Huntington Beach-based surfwear maker Quiksilver Inc., which ranked No. 26 on last year’s Business Journal list of public companies.
By market cap, Sybron Dental could come in somewhere near Santa Ana-based chip maker Microsemi Corp., which counted a $500 million market value as of last week. Sybron International counted a $2.9 billion market value as of last week.
Sybron Dental employs 250 people at its 100,000-square-foot Orange headquarters and about 3,400 worldwide, according to the company. For the quarter ended Sept. 30, Sybron Dental reported earnings of $6.7 million on revenue of $112.1 million.
Investors in Sybron International as of Nov. 30 are set to receive one Sybron Dental share for every three shares of the parent they own. In filings with federal regulators, Sybron International officials said they are splitting the company to allow managers to focus on their core businesses.
The bulk of Sybron International’s sales consist of lab equipment such as microscope slides, plastic containers and other life science products. After the spin-off, Sybron International plans to rename itself Apogent Technologies Inc. and move its headquarters to New Hampshire.
Sybron International is now of a size where it can compete effectively as two units, said Derek Leckow, an analyst with Barrington Research Associates in Chicago.
“They want to unlock the value of their life science business,” he said. “They feel the market is not giving them the multiple they need.”
As of last week, Sybron International’s shares were trading at about 26, down from a year high of 33 hit in the spring. At the end of June, the stock slipped to around 18 after the company said it would miss profit estimates for its fiscal third and fourth quarters due to higher interest rates, the strong U.S. dollar and lower sales growth in the lab business.
Part of the reason for the spin-off is a shift in Sybron International’s business mix, said analyst Holmes of Tucker Anthony. In the early 1990s, Sybron Dental made up about two-thirds of sales. Today, lab products make up the bulk with dental gear at about a third.
Holmes said he believes Sybron Dental shares could trade in a range of 13 to 23 once they are in the market.
In Securities and Exchange Commission filings, Sybron International said it expects the dental company’s earnings growth to be around 10% a year, excluding potential acquisitions.
“That’s quite a nice backdrop,” Leckow said.
While the number of dentists remains stable, dental procedures and patient loads are growing, Leckow said.
“People are retaining their teeth longer. They’re taking care of them with preventive dentistry,” he said.
Sybron Dental has 22 facilities in the U.S. and in Canada, Japan, Latin America and Europe.
Floyd Pickrell Jr., Sybron Dental’s president, is set to become chief executive after the spin-off. Kenneth Yontz, the current president and CEO of Sybron International, will be chairman of Sybron Dental and Apogent.
Other Sybron Dental executives include Gregory Waller, vice president of finance, chief financial officer and treasurer, and Stephen Tomassi, vice president-general counsel and secretary. The company declined interviews in the run up to the spin-off.
Sybron Dental’s own subsidiaries include: Kerr Dental, which makes restorative dental materials and instruments used in root canal therapy; Ormco, which produces orthodontic supplies such as bracket braces, bands, crowns and elastics; and Metrex Research, a maker of infection-control products.
Analysts cite York, Pa.-based Dentsply International Inc. as Sybron Dental’s closest competitor. Dentsply counts annual sales of about $900 million and a $2 billion market cap as of last week.
“Dentsply is the largest (dental) manufacturer in the world,” Holmes said. “Its Caulk division would compete directly with Kerr.”
Other industry players include Patterson Dental Co. in St. Paul, Minn., National Dentex Corp. of Wayland, Mass., and Young Innovations Inc. in Earth City, Mo. Align Technology Inc., a privately held Santa Clara-based maker of undetectable braces, has been mentioned as a company to watch in the industry. n
