Össur signed an agreement to acquire all shares of privately owned Fior & Gentz.
Fior & Gentz develops and distributes knee and ankle orthotic joints to create custom-made devices for patients with gait impairment due to neurological conditions. Fior & Gentz was founded in 1997 in Germany and employs around 80 people.
In 2023, Fior & Gentz reached total sales of approximately EUR 21 million (approximately USD 23 million), up 16 percent from the year before, and preliminary earnings before interest, taxes, depreciation, and amortization (EBITDA) margin is 30 percent. In the period 2020 to 2023, sales grew 14 percent annually on average. The majority of sales are generated in Germany with remaining sales generated internationally.
The acquisition of Fior & Gentz represents an attractive opportunity for Össur to enter the fast-growing neuro orthotics market. Fior & Gentz’s key markets are estimated to be growing in the range of 10-12 percent. Sales are expected to exceed the estimated market growth in the near term and continue to yield a strong EBITDA margin above 30 percent.
“The acquisition of Fior & Gentz is in line with our Growth’27 ambition and a strong strategic fit for Össur in addition to meeting our strategic objective to address chronic mobility challenges in a broader context,” said Sveinn Sölvason, Össur president and CEO. “We are entering a new but highly complementary product segment, as individuals with certain types of neurological conditions are already served by our primary customer channel, orthotic and prosthetic clinics. With Fior & Gentz’s sales largely generated in Germany today, there are commercial synergies in leveraging Össur’s global sales structure to serve a larger patient population. We are very pleased to welcome the Fior & Gentz team to Össur, and I am convinced that our combined efforts will benefit our customers and patients around the world.”
“We are excited to become a part of Össur and benefit from its global reach and strong track record of improving people’s mobility,” said Jörg Fior and Ralf Gentz of Fior & Gentz. “Our product offering is an excellent match to Össur’s broad and innovative product portfolio, and we are looking forward to continuing our profitable growth journey together.”
The purchase price (enterprise value) for Fior & Gentz is EUR 100 million (approximately USD 109 million) plus a contingent additional purchase price (earnout) of estimated EUR 10 million (approximately USD 11 million), maximum EUR 20 million (approx. USD 22 million), depending on sales performance in the years 2024-2026. Today, Össur pays EUR 60 million in cash, financed partly through additional credit facilities, and issues new shares worth EUR 25 million to the sellers of Fior & Gentz. The remaining EUR 15 million will be paid in cash two years after closing.
In connection with the acquisition, the board of directors of Össur will issue 6,636,122 new shares in Össur, raising the total share capital in nominal value by 1.6 percent from ISK 421,000,000 to ISK 427,636,122. The price of each new share is DKK 28.10 and the total value of the share capital increase is thus DKK 186 million (EUR 25 million).
The sellers of Fior & Gentz subscribe for all the new shares. The sellers have also agreed to a one-year lock-up period from closing for all the new shares, and to a lock-up period of an additional year for 50 percent of the new shares, during which they are not entitled to sell their shares in Össur.
The transaction is estimated to be accretive to Össur’s organic sales growth and EBITDA margin before special items and is expected to have minimal impact on earnings per share (EPS) in 2024 and to be EPS accretive from 2025.
Össur will expense special items of around USD 1 million as part of the transaction in the first quarter of 2024 and net interest-bearing debt to EBITDA before special items will, all else equal, be temporarily slightly above the target range of 2.0-3.0 times.
Össur will publish a 2024 financial year guidance, including the impact of the Fior & Gentz acquisition, in connection with the publication of the 2023 Annual Report on January 30.
The transaction is not subject to any regulatory approvals and the effective date for the financials of Fior & Gentz is January 1 although the transaction was signed and closed January 16. As part of the transaction, Össur will be renaming its prosthetics sales segmentation to Prosthetics & Neuro Orthotics where Fior & Gentz’s sales will be included.
Össur hosted a conference call about the acquisition on January 16 at 5:00 a.m. ET. To view a webcast, visit the Össur Conference Call Webcast.
