AstraZeneca has slipped back despite reports it is close to selling its dental implant and medical device business Astra Tech for $1.8bn.
The buyer is said to be US dental equipment group Dentsply, which apparently saw off a number of rival bids, including from private equity. Astra Tech, the world's third largest manufacturer of dental implants, had been on the sale block since last November. But analysts suggested the reported price was a little on the low side, and Astra's shares have lost early gains to sit 4p lower at £30.26. Jeremy Batstone-Carr at Charles Stanley said:
We note that Astra Tech reported first quarter 2011 sales ahead by 7% to $141m, thus the business appears to be being divested on around 3.2 times sales, somewhat low relative to other transactions previously achieved in this segment (3.5 times to 4 times sales).
Given AstraZeneca's well known and much debated forthcoming off-patent cliff it remains to be seen how the company will utilise the proceeds of this disposal. Given the apparent paucity of late-stage pipeline products it is possible that AstraZeneca might invest in specifically targeted therapeutic areas, or to expand its interest in worldwide branded generic operations. It is also possible that part of the proceeds could be utilised to augment the existing share buyback programme (currently $4bn) in a move likely to prove marginally enhancing in an already earnings accretive process.
