Overview
Japan based Private Equity group Unison Capital recently sent out teaser letters to potential buyers to sell Korea-based Medit Corp. Based on insightsZ sources, Unison Capital owns 51 percent of the company whereas the remaining is still held by the company’s original founder.
The PE group expects to complete the transaction latest before Q4 2022, and the deal is handled by Citigroup Global Markets. Medit Corp. was founded in the year of 2000 as a 3D industrial scanner maker by MIT alumni Chang Minho. Although the company was not among the early movers in the field of intraoral scanning equipment, nevertheless the company’s brand promise and faster innovation cycles enabled it to turbocharge its growth and become a sizeable player in its category.
The PE Group expects to be paid out more than USD 3 billion from the new buyer, as a part of the transaction deal. insightsZ forecasts that while the acquisition premium is based on the new buyer’s synergy potential, nevertheless it will be difficult to find a buyer with that price tag exceeding USD 3 billion. That’s primarily because of the combination of following reasons:
Medit Corp. has not yet figured out how to transform itself from an equipment manufacturer to a SaaS company. In other words, while the company has attempted to turbocharge its innovation cycles and launch its SW suite ‘so-called’ Medit Apps, nevertheless the company has not yet offered a paid-subscription model (or at least a one that’s commercially successful). Neither has the company leveraged on creating a Freemium model wherein the company expects to charge its existing userbase for premium software features. For this reason, we will not value the company as a software company, but rather as a medical device equipment manufacturer.
Global inflationary pressure is negatively impacting consumer demand and margins alike. This has clear impacts on the company’s expected sales projection, especially as the outlook for the remaining FY 2022 still looks uncertain. This situation gets worsened by global supply chain disruptions and outbreak of COVID-19 in Mainland China during H1’22.
insightsZ also believes that the PE Group Unison Capital has chosen a less favorable timing to look for a prospective buyer. That’s simply because of the major economic headwinds as well as a sharp decline in the market cap/ value of leading global dental manufacturers and DSOs – negatively impacting the market sentiment.
Medit’s portfolio of intraoral scanners achieves the same level of efficacy as other leading intraoral scanner brands, but at a significant price discount. This has its own negative impact on the brand’s margins versus other leading premium IO scanner brands like XRAY’s Primescan and even ALGN’s iTero.
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