Deal in focus: Montagu enters Dutch market with Dorc purchase

"We hope it's going to be the first of many," says Montagu investment director Hubert van Wolfswinkel, who worked on the deal. "We've been looking at the Dutch market for several years, and it's a market where several of our portfolio companies have operations. It's right in the middle of our geographic focus area, so it makes all the sense in the world for us to be there."

The investment highlights the strengths of the Netherlands' rich history in the manufacturing industry, which is what attracted Montagu to Dorc. "It makes very high-quality products that would be badly missed by their customers if they weren't there," explains van Wolfswinkel.

Founded in 1983, Dorc provides equipment and instruments for ophthalmic surgery and exports its products to 80 countries. Its range of products includes both reusable and disposable instruments, VisionBlue surgical liquids and surgical machinery. The products are designed for use in the surgical treatment of glaucoma and cataracts, as well as retinal and corneal problems.

Eye for a good deal
The company generated sales of €80m last year. According to van Wolfswinkel, only 5% of sales are generated in the Netherlands. The international footprint of the company was a major driver in Montagu's investment, as well as its underlying growth thanks to an exponential increase in emerging markets.

"The market for this type of eye surgery is growing, because the conditions that cause the need for surgery are driven by ageing and diabetes," says van Wolfswinkel. "On top of that, more and more people in emerging markets are getting access to the surgery they need."

The investment by Montagu took a few months to complete, says van Wolfswinkel. News of a possible Dorc sale came to light in July last year, when Rabo brought in William Blair to oversee a sale process. The firm had acquired a minority stake in Dorc in June 2009.

Alongside the private equity division of Rabo Bank were selling shareholders Van Lanschot Participaties – the private equity unit of Van Lanschot Bankiers – and holding company Oftavinci.

Long-term vision
Under Montagu's ownership, Dorc plans on increasing its direct presence in more international markets. The company currently operates in several overseas markets through distributors. The plan is to gain a more solid foothold in these countries, says van Wolfswinkel.

Furthermore, the company will start looking at potential strategic acquisitions with Montagu – and the firm is prepared to provide the financing for bolt-ons. "We will absolutely be backing the company with more capital if required to make acquisitions that make sense for growth," says van Wolfswinkel. "There are a number of potential acquisition opportunities that look interesting already that may be complementary to Dorc's products and services, but it's still very early-stage and we'll assess these opportunities together with the management."

A debt package for the deal has yet to be finalised, says van Wolfswinkel, but leverage will soon be put in place.

Dorc is headquartered in Zuidland with additional offices in the UK, Sweden, Germany, Austria, France, Spain, Dubai, China and the US. The company employs 300 staff. Theo Sonnenberg is its CEO.

Montagu will take up a seat on the company's board of directors in the near future, says van Wolfswinkel.

PEOPLE
Montagu – Alex Dabbous, Hubert van Wolfswinkel

ADVISERS
Equity – ING (Corporate finance); Wells Fargo Securities (Corporate finance); Clifford Chance (Legal).
Vendors – William Blair (Corporate finance); DLA Piper (Legal).

This deal was originally covered on 24 February.

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• Topics
• Benelux
• Buyouts
• Healthcare
• Netherlands
• Montagu Private Equity