German Prosthetics Maker Ottobock Offers Investors Up To 25-Percent Ownership Ahead Of IPO
By Jof Enriquez,
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German company Ottobock Healthcare GmbH, the world’s largest maker of artificial limbs, is reportedly drawing interest from private equity firms.
Reuters sources say KKR, CVC, BC Partners, and Advent are vying to get a 20 percent stake in Ottobock's core healthcare business, which includes prosthetics, orthotics, wheelchairs, walkers, cushions, and accessories. Besides equity firms, Ottobock is said to be targeting affluent families and technology funds as potential buyers in a deal to be completed by the end of June, ahead of an initial public offering.
Ottobock CEO Hans Georg Naeder announced in 2015 that the company is planning an IPO this year, offering investors up to 25 percent of stock in the growing healthcare unit, the biggest of its three businesses. The company also offers information technology services and operates a chemicals business, but is looking to focus solely on healthcare.
The 98-year old, privately-held company says it is currently valued at about €3 billion ($3.2 billion). Sources told Reuters that figure is 12 times Ottobock's expected 2017 earnings before interest, tax, depreciation and amortization of €250 million, a discount to some rivals as the business includes its lower-margin wheelchair business.
Ottobock group sales in 2015 were EUR 1.031 billion, with 7,614 employees worldwide, according to the company's web site. The Healthcare business accounted for €847.7 million of that total, with 6,522 employees.
Based in Duderstadt, Germany, with a U.S. headquarters in Minneapolis, Minn., Ottobock produces more than 40,000 types of product — including prosthetic and orthotic components, and mobility and rehabilitation products — and markets them in more than 50 countries.
Ottobock was founded in Germany in 1919 by Otto Bock, a prosthetist who pioneered manufacturing techniques, and one of the first to build separate components (like knees and feet) that could be combined, altered, or customized to fit a patient’s unique anatomy.
Among its current products is the Dynamic Arm, a computerized, myoelectric device that utilizes delicate sensors placed on the amputee patient's skin to read the electric currents on the nerves. The device interprets complex muscular signals, allowing for the prosthetic elbow, hand, and wrist to move in a more natural way. Another is the C-Leg prosthesis system, which has sophisticated sensors to help the patient ambulate safely by making make precise, real-time adjustments, driven by 3D motion analysis.
The company says it is planning to use new investments to develop more bionic devices, prosthetic limbs, and orthotic braces closely modeled on natural mechanisms.
Any investment deal that's consummated will help Ottobock achieve "even quicker profitable growth and groundbreaking innovations for the people suffering a handicap," Naeder said in a statement, reports Reuters.