Steris (NYSE: STE) today announced it has entered into a definitive agreement to divest its dental segment to Peak Rock Capital for $787.5 million.
The transaction will be structured as an equity sale. Terms of the agreement also include the opportunity for Steris to receive an additional earnout of up to $12.5 million, which is subject to the achievement of certain revenue targets of the dental segment in fiscal year 2025.
“Since acquiring our Dental segment through the Cantel acquisition, we have focused on deploying lean manufacturing methods to drive operating efficiencies. We have been impressed with the strength of the team, their willingness to adopt lean philosophies, and the leadership position the business has with customers,” President and CEO Dan Carestio said in an SEC filing. “After a thorough review of strategic alternatives, we have decided to divest our Dental segment to allow us to focus on our customers within our core markets in healthcare, pharma and medtech who can most benefit from our full portfolio of products and services. We are confident this business will do well with the investment and support of Peak Rock Capital.”
The transaction is subject to customary closing conditions, including regulatory review. It is anticipated to close in the first quarter of fiscal 2025.
Steris intends to use proceeds from the sale to repay debt. It expects the resulting benefit of the reduction in interest expense to be about 35¢ per diluted share. The dental segment will be reported as discontinued operations for Steris’ Q4 and fiscal 2024. The company will provide an updated outlook for fiscal 2025, including the transaction.
Dental segment revenue was $407 million and contributed segment operating income of $86 million in the fiscal year ended December 31, 2023. Steris’ overall revenue was nearly $5 billion last year.
