Ontario Canada Teachers' Pension Plan Acquires Heartland Dental Care

A Canadian pension plan is set to acquire an American dentistry management firm, Heartland Dental Care.

Ontario Teachers' Pension Plan said on Monday it has agreed to take control of Heartland Dental Care Inc in a deal that values the U.S. dental practice management firm at about $1.3 billion, according to a person familiar with the matter.

Ontario Teachers, one of Canada's largest pension funds, is buying a majority stake in Heartland, while founder and Chief Executive Rick Workman will retain a minority stake along with management and employees, the two companies said in a statement.

Effingham, Illinois-based Heartland manages more than 375 affiliated dental practices in 21 U.S. states, providing dentists with administrative services such as personnel staffing, purchasing, and financial, marketing and technology support.

Ontario Teachers outbid private equity firms KKR & Co, Apax Partners and Madison Dearborn Partners, which had also pursued a buyout of Heartland and submitted final bids on October 22, the person familiar with the matter said.

Ontario Teachers did not disclose terms of the transaction, but the deal values Heartland at roughly 11 times the company's annual earnings before interest, tax, depreciation and amortization of around $120 million, according to the source.

I wonder what this means to the dentists who currently are Heartland Dental offices.

What will be their stake?

And, as I understand by other news reports that founder Rick Workman who is a dentist will continue to run the company as CEO. So, when all is said and done, is this just a cash out for Workman - so that he can diversify his assets?

This is interesting, particularly at a time when state dental boards and federal medicaid regulators are looking closely at dentistry management companies.