Dentsply in talks to buy AstraZeneca unit: source

A worker leaves the AstraZeneca research facility in Loughborough, March 2, 2010.

LONDON (Reuters) - Drugmaker AstraZeneca (AZN.L) is close to a deal to sell its dental implants and medical devices company Astra Tech to Dentsply International for about $1.8 billion, a person familiar with the situation said.

U.S. dental company Dentsply (XRAY.O) beat bids from rival medtech groups and private equity firms to gain exclusivity to negotiate a deal, the person said.

Astra Tech, which had revenue last year of $535 million, is the world's third-largest dental implants maker after Straumann (STMN.S) and Nobel Biocare (NOBN.VX). It has a separate medical devices arm focused principally on urology and surgery.

An acquisition of Astra Tech would boost Dentsply's long-term growth potential, giving it a 21 percent share of the more than $3 billion worldwide dental implant market, roughly matching the market shares of Nobel Biocare and Straumann, according to Robert W. Baird & Co analyst Jeff Johnson.

Like other parts of the medical device sector, the dental implant market has been hurt by job losses and lower consumer spending but is starting to grow again as the economy recovers, Johnson said.

Straumann and Nobel Biocare had both been eyeing the Astra Tech business but pulled out of the process before tabling binding bids, Reuters reported earlier this month.

An agreed upon deal with Dentsply could be announced as early as this week, the person familiar with the situation said.

AstraZeneca Chief Executive David Brennan told Reuters over the weekend that attempts to sell Astra Tech were ongoing, but would not be drawn on a timetable.

"We've been working through a process. We had bidders come in. People want to do due diligence .. it shouldn't drag on forever," he said.

A deal with Dentsply would underline corporate bidders' resurgent appetite to use cash to make acquisitions and outbid private equity firms for strategic assets.

The auction process, run by JPMorgan (JPM.N), attracted widespread interest with rival medtech companies and private equity firms invited to bid for either Astra Tech's dental implant business, the medical devices arm, or the business as a whole.

AstraZeneca declined to comment. York, Pennsylvania-based Dentsply was not immediately available for a comment.

Shares of Dentsply were up 79 cents, or 2.16 percent, at $37.31 in morning trading on the New York Stock Exchange.

(Reporting by Simon Meads and Jodie Ginsberg; additional reporting by Susan Kelly; editing by Chris Wickham, Elaine Hardcastle, Dave Zimmerman)