The strength of a dental device is creating new Carlyle, the US private equity group, which bought Britain's largest chain of dental two groups merged into one with nearly 450 of their practices.
Carlyle said on Friday it would acquire Integrated Dental Holdings from the private equity arm of Bank of America Merrill Lynch and merge it with Associated Dental Practices.
The deal values the two companies, numbers one and three in the UK respectively, at about £600m ($951m).
Palamon Capital Partners, which owns ADP, is rolling over its stake in the chain of 125 dentistry practices into a holding of less than 25 per cent in the new company, in which Carlyle will own a majority position.
Richard Smith, who left Lloyds Pharmacy last year to become chief executive of IDH, will take charge of the merged group, which is expected to treat more than 3.5m patients every year.
The deal values the two companies at 10 to 11 times their combined earnings before interest, tax, depreciation and amortisation of about £55m-£60m.
The combination of IDH and ADP comes as the UK coalition government is launching an overhaul of the National Health Service. It is seeking to cut costs and improve service in many areas. The merged company is focused on NHS patients.
Mr Smith said the group would consolidate the fragmented UK market by snapping up other dentistry practices.
“These businesses only have 6 per cent market share, so there is still an opportunity to continue to consolidate,” he said.
Government is developing new regulations for dentists, which will require them to register all patients, raise the standard of services – such as by installing sterilisation rooms – and to undergo higher levels of supervision and measurement.
These requirements are expected to push the industry to consolidate.
Mr Smith added that the merged company would seek to diversify into areas apart from dentistry, such as primary care services and cosmetic treatments. “I do believe that we can be more than just a dentist,” he said.
Eric Kump, managing director of Carlyle, said: “We believe the business has the capability to extend into other local primary care areas consistent with the government’s stated objective.”
Third-party design firm Merrill Lynch bought 2.9 billion pounds, the private equity sector in 2008 in the United States Bank of America merger. The sale of about 450 meters to the Carlyle Group will have a £ 50 per cent return on equity investment in banks.

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