Dentsply, Sirona merger clears regulatory review

Dentsply and Sirona Dental Systems announced that the proposed merger of the two companies has cleared regulatory review.

Following similar approvals in the U.S. and Ukraine, Russia's Federal Antimonopoly Service and the European Commission (EC) have approved the proposed merger, subject to certain conditions being fulfilled, the EC noted. The regulatory clearance marks a milestone in the proposed transaction, and the companies now expect the transaction to close on or about Monday, February 29, 2016, according to the companies.

When the merger was announced in 2015, the European Commission began an investigation into the transaction. The concern was that the merger "would potentially give the merged entity the ability and incentives to exclude competitors by closing Sirona’s chairside CAD/CAM system to other block providers to favor its own block," according to an EC release.

The commission noted, that while "Denstply’s offer in chairside CAD/CAM blocks is limited," it "could be expanded in the near future to replace other CAD/CAM blocks suppliers." This might lead to higher prices for CAD/CAM blocks, which would be paid by dentists who would pass that cost on to their patients.

To address the EC's concerns, Dentsply and Sirona "offered to ensure the compatibility of Sirona’s chairside CAD/CAM systems with the CAD/CAM blocks of competitors." This will be accomplished through the following:

• An extension of the existing licensing agreements with the competing chairside CAD/CAM block suppliers by 10 years, until March 1, 2026
• Technical and legal safeguards for competing CAD/CAM block suppliers for the duration of their licensing agreements, including providing the necessary know-how to these suppliers, protecting confidential commercial and technical information, and refraining from taking measures that could limit the usability of the competitors’ CAD/CAM blocks
• A fast-track arbitration procedure for dispute settlement

The EC stated that "these commitments addressed its competition concerns." The decision to approve the transaction is conditional on full compliance with the commitment.

The New York Times reported a price of $5.5 billion on the transaction. It will be an all-stock merger "of equals," according to a statement by the companies. Sirona shareholders will receive 1.8142 shares of Dentsply for each existing Sirona share. When the transaction closes, Dentsply shareholders will own 58% of the combined company; Sirona shareholders will own 42%.