Private Equity Takes Stake in Henry Schein
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- Published: Friday, 03 January 2025 14:00
- Written by Peter Ingle
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The reach of private equity in dentistry has not been limited to involvement in the larger corporate groups of practices. Private equity firm KKR & Co Inc has taken a large stake in Henry Schein [NASDAQ:HSIC] and reached a deal to add members to the company‘s board.
KKR has been involved in some of the largest buyouts in history. While the 2007 acquisition of Alliance Boots came in at $12.4 billion, their takeover of Texas-based power utility TXU for $44 billion in 2007 remains the largest buyout completed to date.
The price of Henry Schein’s shares rose over 3% on the news.
The medical and dental supplies distributor, with a market capitalization of about $9.5 billion, has reportedly come under pressure from other investors in recent weeks. They had been pushing the company to compete effectively with large distributors such as Cardinal Health, a global healthcare services and products company which claims to work with 90% of US hospitals.
Prior to KKR’s arrival, activist investors had plans to nominate up to six directors to the board at Henry Schein. Critics had said that the company needed a new CEO, to cut costs and optimize its capital allocation.
KKR will now have a 12% stake in Henry Schein and under the agreement there will be two new independent directors joining the Henry Schein board. One is a partner at KKR where he leads the healthcare industry team. The other is an executive advisor to KKR and former executive at life sciences, biotechnology and diagnostics company, Danaher.
Henry Schein’s board has also appointed a further independent director, who is expected to join the board’s Strategic Advisory Committee.
KKR arrive with experience in the dental business, owning the dental group 123Dentist, which is one of the largest dental support organizations in Canada, supporting nearly 350 practices. It also owns Heartland Dental a similar support organisation, which claims to have been involved with over 1700 practices since 1995.
Henry Schein can trace its history back to a New York pharmacy opened in 1932 by its founder. It arrived in the UK in the 1980’s, buying one of the new wave of catalogue based discount suppliers of dental materials, which were then disrupting the market.
With a presence in 33 countries Henry Schein was named for the 13th consecutive year as one of the Ethisphere Institute World’s Most Ethical Companies in 2024.
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