NEW YORK (TheStreet) -- Shares of Sirona Dental Systems (SIRO) are down by 4.24% to $95.15 in mid-morning trading on Wednesday, following reports that rival Dentsply (XRAY - Get Report) is purchasing the company for $5.56 billion.

The combination will create the largest maker of professional dental products and materials in the world, with combined annual sales of about $3.8 billion.

The companies expect the all-stock deal to be concluded in first quarter of 2016 pending regulatory approval.

Sirona shareholders will receive 1.8142 shares of Dentsply for every share of Sirona they own.

Dentsply shareholders will own 58% of the company while Sirona CEO Jeffrey Slovin will take over as CEO of the combined company.

Separately, TheStreet Ratings team rates SIRONA DENTAL SYSTEMS INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate SIRONA DENTAL SYSTEMS INC (SIRO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results. "

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • SIRONA DENTAL SYSTEMS INC has improved earnings per share by 13.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SIRONA DENTAL SYSTEMS INC increased its bottom line by earning $3.13 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($3.97 versus $3.13).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Health Care Equipment & Supplies industry average. The net income increased by 14.2% when compared to the same quarter one year prior, going from $51.50 million to $58.80 million.
  • The revenue growth significantly trails the industry average of 34.5%. Since the same quarter one year prior, revenues slightly increased by 2.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SIRO's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SIRO has a quick ratio of 2.12, which demonstrates the ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: SIRO