Straumann Expands in Brazil with Investment in Neodent: A Risky Deal?

Straumann announced a major expansion into Brazil, with the news that it will invest 260 million Swiss francs ($277 million), to buy a 49% stake in Neodent, Brazil’s largest dental implant manufacturer. At first glance, basic arithmetic suggests that this deal values the entire Neodent at around $600 million! Neodent had mere sales of 167 million Brazilian real ($84 million) last year and accounts for approximately one third of the local Brazilian market.

While Brazil places an estimated two million dental implants a year, making it the second largest dental implant market by volume after the United States, the price tag for Neodent seems excessive. The fact of the matter is that while the volume of dental implants placed is large Brazil, the price of dental implants, is significantly below that of the US and other top Straumann markets. Straumann is surely not seen by the market as a “discount” implant manufacturer. Perhaps the easiest explanation for the high price tag is that Straumann had no easier way to break into the fast-growing Brazilian market. Time will tell whether this move by Straumann makes sense.

Straumann President and Chief Executive Beat Spalinger has this to say about the acquisition:
“With this acquisition … Straumann can unlock the full potential of the South American markets.”

What are your thoughts on Straumann’s move into Brazil? Can they adjust to the market dynamics in Brazil?