dentalcorp Holdings Ltd T.DNTL

TD Raise Target

[retiredcf]

You're welcome preytel. TD raise their target by $1.50 to $14.50. GLTA

dentalcorp Holdings Ltd.

(DNTL-T) C$8.00

Expressions of Interest Received; Strategic Review Initiated Event

We are resuming coverage following a brief period of restriction given TDSI's involvement as a financial advisor to the Special Committee overseeing dentalcorp's strategic review process.

Impact: POTENTIALLY POSITIVE

Yesterday morning, dentalcorp announced that it has formed an independent special committee to complete an evaluation of strategic alternatives that might unlock shareholder value. The most immediate decision relates to a possible sale with management highlighting "unsolicited expressions of interest". As a reminder, dentalcorp's CEO, Graham Rosenberg, controls ~35% of the votes through his multiple voting shares, while private equity firm L. Catterton controls ~28%, leaving these two shareholders largely in the driver's seat regarding possible outcomes.

In our view, the announcement of unsolicited interest for DNTL is not surprising given the scarcity of large, healthcare-focused, platform assets with recession resiliency such as DNTL, and given its valuation has significantly decoupled from public peers (U.S. cash pay healthcare services are trading at 16.4x EBITDA and other high-growth Canadian companies in unrelated industries at 13.4x). This is despite reporting solid quarterly results and delivering on its acquisition pipeline. Furthermore, there appears to be a significant public/private valuation disconnect for dental consolidators; we understand that KKR completed the recent three-way acquisition of 123Dentists, Altima, and Lapoint group for a high-teens forward EBITDA multiple, and small multi-location platforms have been transacting in the low double-digits. Admittedly, interest rates have materially increased since the KKR transaction in July, which may have tempered private market valuations. However, we still anticipate that there would be strong interest from private equity at valuations well above DNTL's current trading multiple, with DNTL offering all the hallmarks for long-term private equity value generation: 1) large and highly fragmented market; 2) recurring, recession resistant revenues; 3) industry leading market share/reputation; 4) strong FCF potential as a low-capex services business; and 5) double-digit incremental acquisition returns.

TD Investment Conclusion

We believe the strategic review could unlock additional value for investors through a possible takeover transaction. However, even under the status quo scenario, we continue to see attractive value in dentalcorp's shares at current levels, given potential to drive double-digit EBITDA growth from internally generated cash flows.

[JosephM1]

With the high margins on their revenues,  the interest rate on the debt is a cost of doing business.  Certainly better at 3.5 to 4% but very manageable at 6.5%..  Anyone saying differently is or has no business or financial knowledge!

[preytel]

Thanks again for posting! This one hits differently because they are actually involved in the review and raised their guidance. Seems to be straight from the horses mouth as it were.

[anesthesiadoc]

so TD raised their target to 50 cents above the IPO price lol, hardly the 18 x nonsense being touted on this board. its so funny how many people are being sucked into this price action with no material evidence of a buyout whatsoever. See you all in 2 weeks at 6.25

[LonghandStrong]

You've got a lot of time to post doc.   Perhaps if your column was more full you'd be less butt-hurt.   

[JosephM1]

Is that imbecele still professing his knowledge.  Funny!!

[preytel]

he has raised HIS target to $6.50 instead of $5.50 so he's warming up. 

[BlueJay2020]

Lol!  In all fairness, if the doc was one of those buying at, or north of, the IPO price he would have every right to be cheesed off.  Even a buy-out, if it arrives imminently, almost certainly won't stop them being underwater.  It's only buyers in the sixes and sevens who are understandably enthusiastic.   It just goes to show the risks involved in buying into an

[anesthesiadoc]

You seem to be the only smart poster on this board. The CEO saw his stock declining even during postive days on the exchange. He likely saw a scenario where left unchecked this would challenge the low $5's. He had to pivot quickly and convene a special board with the illusion that there is some concrete interest in the company. Trust me when I tell you this will drift lower and it will be then

[Jf274211]

How does a hostile take over happen when L Catterton and Rosenberg have over 50% of the voting rights?

[LonghandStrong]

I'd be careful suggesting that Rosenberg fabricated the presence unsolicited offers or expressions of interest in order to manipulate share price.    Im sure I'm misunderstanding you, because if not you're suggesting with no facts that he's committing securities fraud.  That's defamation bud.    Be careful, as like many before you, you could find out

[riskmanager]

He's spreading lies and it comes with responsibility. Yes it is defamation. DCC has an offer from many PE right now.  Doc is a fraud and should be sued by the com'any for spreading lies lime this. Graham is a brillant guy and saying he commit securities fraud is unacceptable. uncover this doc guy. 

[anesthesiadoc]

Perhaps I am not in tune with disclosure requirements. All I am saying if there is a potential purchase it could be months down the road. We will see how this unfolds. 

[preytel]

That scared the hell out of you and hopefully the company comes after you because thats not all you said at all. You said the idea of a potential sale was fabricated. Thats what you said. good luck

[Jf274211]

If there was a popcorn eating emoji, I would use it here.

[JosephM1]

Lmfao,  another up day!  Imbecile 

[anesthesiadoc]

only imbeciles are those that paid over $14 for this lol