Carl Zeiss Meditec acquired DORC from Eurazeo
Stem op deze deal via de stempagina: https://mena.nl/genomineerden-best-deal-2024/
Name of the deal: Carl Zeiss Meditec acquired DORC from Eurazeo
Date announced and/or closed: Announcement date: 15 December 2023 Date closed: 3 April 2024
Published value: EUR 985 million
Buyer(s): Carl Zeiss
Target: Dutch Ophthalmic Research Center (D.O.R.C.)
Seller: Eurazeo
Involved firms and advisors
Involved firms and advisors buy side:
RBC (M&A Advisory), CMS (Lead Counsel Legal Advisory Corporate/M&A), Locke Lord (US local counsel Legal Advisory Corporate/M&A) and Deloitte (Transactional services and tax).
Involved firms and advisors target:
Rotschild (M&A Advisory), Meijburg Legal (Legal Advisory Corporate/M&A), KPMG (Transaction Services), (for management:) Baker McKenzie (Legal Advisory Corporate/M&A).
Involved firms and advisors sell side:
Latham & Watkins (Lead Counsel Legal Adivsory Corporate/M&A) and Loyens & Loeff (Dutch local counsel Legal Advisory Corporate/M&A), and L.E.K. Consulting (Commercial). BNP Paribas (M&A Advisory).
Pitch
Brief description deal / Deal outline
Carl Zeiss Meditec, a German supplier of medical technology, has acquired Dutch Ophthalmic Research Center (DORC), a Dutch company that enhances eye surgery and maximises surgeon control by offering approaches for eye disorders, from Eurazeo, a French private equity firm.
About DORC
Dutch Ophthalmic Research Center (DORC) is a global leader in providing equipment, instruments, and liquids for ophthalmic surgery. Founded in 1983 by Ger Vijfvinkel in the Netherlands (who at the time was still an instrument maker at the Rotterdam Eye Hospital) and headquartered in Zuidland, the company has grown significantly, now exporting its products to over 100 countries.
With over 800 employees, the company operates internationally, with direct sales teams in 15 countries. The company is known for its strong innovation culture, which involves close collaboration with top surgeons to develop new tools that meet practical surgical needs.
The Vitality Index (new product revenues as a percent of total revenues) a common metric used to show the innovation effectiveness of an R&D organization is a record 25% for DORC. The company has developed a high-quality and innovative product offering which includes EVA Nexus™, the most advanced dual-function system.
Thanks to the support Eurazeo provided since 2019, DORC. has become one of the world’s leading ophthalmic surgery platforms. DORC is the #2 player in VR packs and #1 player in dyes.
The anticipated net sales in 2023 were €200m and has an installed base of over 2,100 systems worldwide. Dorc is highly profitable. Customers purchase a device but then regularly need to reorder accessories such as tubes, clamps, and needles for single use.
About Eurozeo
Eurazeo is a leading global investment group with €35.4bn in diversified assets under management, including €25bn on behalf of institutional and private clients through its private equity, private debt, real estate and infrastructure strategies.
The Group supports around 600 companies, leveraging the commitment of its over 400 employees, its sector expertise, its privileged access to global markets via 13 offices in Europe, Asia and the United States, and its responsible approach to value creation based on growth.
In 2019 Eurazeo Capital entered into exclusive discussions with funds managed by Montagu Private Equity to acquire DORC (Dutch Ophthalmic Research Center). At that time DORC generated revenues of €125 million, with an average annual growth rate of 9% over the past 3 years. The transaction consisted in the acquisition of 100% of the share capital of DORC and was the fifth investment of Eurazeo Capital IV. The company was valued at c. €430 million (enterprise value), of which c. €300 million equity funded by Eurazeo and its affiliates.
During the holding period DORC achieved strong growth underpinned by a bolstered management team that intensified the international expansion strategy with the setup of Chinese operations and the successful completion of two strategic acquisitions in Germany (in 2022, a minority stake was acquired in the Cologne-based company Wefis), and the US. As a result, DORC increased its strategic value and attracted the interest from a variety of strategic buyers including Carl Zeiss Meditec AG.
In december 2018 Eurazeo announced that it had entered into exclusive discussions to sell DORC to Carl Zeiss Meditec AG for an enterprise value of approximately €1bn (5 x reveue). Under the terms of the agreement, the transaction is expected to have yielded over 2.6x gross cash on cash and 24% gross internal rate of return (IRR) on its original investment, including proceeds of the refinancing closed in December 2021. Upon closing of the transaction, c.€385m of gross proceed has returned to Eurazeo balance sheet.
About ZEISS Medical Technology
Carl Zeiss Meditec AG is one of the world’s leading medical technology companies, headquarteredin Germany. The company primarily focuses on developing solutions in ophthalmology and microsurgery, offering advanced tools for minimally invasive procedures. Its products range from surgical microscopes, intraocular lenses, and optical coherence tomography systems, to lasers and diagnostic devices for treating chronic eye diseases.
Carl Zeiss Meditec operates in over 50 countries, with a strong presence in the USA, Japan, Spain, and France, and employs approximately 4,950 people globally. The company is known for its innovation-driven approach, leveraging artificial intelligence and digital solutions to improve healthcare workflows. Its key product areas are ophthalmology, particularly in cataract, corneal, and posterior eye disease treatments, and microsurgery, where it provides equipment for neurosurgery, ENT, spine surgery, and dental applications.
In terms of financial performance, Carl Zeiss Meditec reported revenues of around $2.2 billion in 2022, with its financial growth driven by strong sales in its ophthalmology and surgical product segments. The company is listed on the MDAX and TecDAX of the German stock exchange, with Carl Zeiss AG holding a majority stake.
The acquisition of DORC will enhance and complement ZEISS Medical Technology’s ophthalmic portfolio and range of digitally connected workflow solutions for addressing a wide variety of eye conditions.
Why should this deal win the Award for Best Deal 2024?
This was one of the largest deals in Dutch market this year and the largest deal for Carl Zeiss in the last 30 years. It involved a private equity seller and a strategic, German buyer. DORC has been the subject matter of quite a few secondaries over the years whereby it traded hands between various private equity firms. Seller and target are engaged in the highly innovative and fast-growing sector of retina surgery systems. Both businesses apply robotics as the core of their offering.
DORC was one of the hottest targets on the market in 2023-2024 and as such the process resulted in a highly competitive auction involving multiple bidders, including sponsors and strategic bidders alike.
The three remaining bidders were all active in the medical field. In addition to Zeiss, they included the American company Johnson & Johnson and the British firm Rayner Surgical. All three produce lens implants that surgeons can insert into patients’ eyes with the help of DORC’s machines.
This being the largest transaction in Carl Zeiss’s recent history, the company has put together a remarkable and quite considerable team supplemented by external advisers such as RBC, BCG, Deloitte, and CMS. This co-operation yielded an extremely efficient process allowing Carl Zeiss to be very effective and snatch the asset ahead of the other bidders for a consideration of EUR 985 million. The strategic fit was a given from the start but to position itself as the right candidate for the business, Carl Zeiss had to be quicker on its feet than the other bidders and anticipate their moves, while executing swiftly in an attempt to exceed the seller’s expectation every step of the way. It has done so in a manner that we have rarely witnessed from a European based corporate.
Deal rationale
With DORC, Zeiss is in a unique position to offer an unmatched portfolio of market-leading technologies to ophthalmologists, including an expanded, digitally connected Retina Surgery Workflow from Zeiss. The companies’ portfolios are highly complementary and the powerful combination of the EVA NEXUS® platform from DORC with Zeiss’s extensive range of visualization, diagnostic and therapeutic devices, and surgical instruments and consumables, all connected to a digital ecosystem, will enable the creation of efficient clinical workflows that will reshape the ophthalmology market for the benefit of surgeons and their patients alike.
“Together we are better. Today holds significant importance for us as we bring our teams together and turn our collective attention toward delivering breakthrough innovations and solutions for our customers. We are very excited to welcome D.O.R.C.’s team members to our ZEISS family and to begin integrating our products and practices as we work toward a brighter future together,” says Dr. Markus Weber, President and CEO of Carl Zeiss Meditec AG.
“Together we can offer an unmatched portfolio of advanced technologies and digital workflows. With D.O.R.C., we have an incredible opportunity to serve ophthalmologists around the world with more complete workflows and solutions than ever before,” says Euan S. Thomson, Ph.D., President of Ophthalmology and Head of the Digital Business Unit for ZEISS Medical Technology. “We’ve set our sights high to become the top player in the world for ophthalmology by leveraging our workflow solutions, enhancing our portfolio offerings and market position in the anterior surgery segment, and by significantly expanding our presence in the posterior surgery segment.”
What is the impact of this deal for the company?
With the acquisition of Dorc (Dutch Ophthalmic Research Centre), the German Meditec division of Zeiss strengthens its position in the ophthalmology market, particularly in the field of vitreoretinal surgery, a specialty focused on treatments for the gel-like vitreous humor in the eye and the light-sensitive retina. Under the wings of Zeiss, the Dutch company benefits from increased leverage in the medical market. The combination of portfolios will create unmatched end-to-end solution within the digitally-connected ZEISS Retina Surgery Workflow.
What is the impact of this deal for the direct stakeholders?
“Together we are stronger. With four decades behind our amazing business and surgeon-inspired innovation, we look forward to writing the next chapter of our success story together with ZEISS Medical Technology,” says Pierre Billardon, CEO of D.O.R.C. “By joining forces, we can extend our reach, scale our efforts, and accelerate ophthalmic surgery advancements for more surgeons faster than before. I am filled with a great sense of pride and gratitude for every D.O.R.C. team member. Together, we have achieved so much to arrive at this pivotal moment in our journey. And together with ZEISS, we have so much more to accomplish in our bright future ahead to help patients see again.”
What is the impact of this deal on society?
This deal is also very important for all patients over the world battling with eye disorders or surgery. With the completion of this acquisition, health care professionals can expect to benefit from an extensive and unique combination of digitally connected devices and workflow solutions, from clinical pre-operative needs to the surgical operating room. This supports efficient clinical workflows and helps surgeons to improve outcomes for their patients. The two companies’ immediate priorities span maintaining business continuity and customer satisfaction, cultivating areas of deep expertise, and enhancing the value of their solutions and services for current and future customers.
What was most complex about this deal?
Speed of execution due to a highly competitive process, co-ordination of the numerous workstreams that participated in the process and the termination and settlement of DORC’s management incentive program, which involved quite a few participants and some related complexities.
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