Zimmer to acquire Biomet in $13.35bn deal

25 April 2014 (Last Updated April 25th, 2014 01:00)

Orthopaedic device maker Zimmer has signed a signed a definitive agreement to acquire Biomet in a cash-and-stock deal valued at about $13.35bn, including the assumption of net debt.

Image

Orthopaedic device maker Zimmer has signed a signed a definitive agreement to acquire Biomet in a cash-and-stock deal valued at $13.35bn, including the assumption of net debt.

Subject to customary closing conditions and regulatory approvals, the deal is expected to close in the first quarter of 2015.

It is expected to form an orthopaedics entity in the $45bn musculoskeletal industry with a broad portfolio of products, technologies and services.

This merger is aligned with Zimmer's strategic framework, which focuses on growth, operational excellence and prudent capital allocation.

The combination will enhance enterprise diversification with broader franchises in the knee, hip, surgical, spine and dental categories, as well as in the faster-growing sports medicine, extremities and trauma categories.

In addition, the combined company is expected to advance innovation to benefit healthcare stakeholders, and stockholders will likely benefit from a more diversified and predictable revenue mix consistent with the comprehensive portfolio.

Zimmer president and CEO David Dvorak said: "We believe that current demographic and macroeconomic trends affecting the healthcare industry will reward companies that successfully partner with other key stakeholders to improve patient care in a cost-effective manner.

"We have a great deal of respect for what the management team and employees have accomplished at Biomet, and we are confident in their ability to be a very important part of the combined organization as we bring our two world-class companies together and cement Warsaw, Indiana as the musculoskeletal innovation capital of the world."

While the broader portfolio of the combined company is expected to boost its sales network making it effective in all geographies, the enhanced abilities of this sales force to help healthcare systems will likely contribute to better patient outcomes in a cost-effective manner.

The combined company will be based in Warsaw, Indiana, and conduct business under a consolidated name that will leverage the strengths of both brands.

"We believe that current demographic and macroeconomic trends affecting the healthcare industry will reward companies that successfully partner with other key stakeholders to improve patient care in a cost-effective manner."

Dvorak will be the president and CEO of the company, while two representatives of Biomet's principal stockholders will join the board, which will be expanded accordingly.

Biomet president and CEO Jeffrey R Binder said the combination with Zimmer will prepare the company to compete as a stronger entity in the medical device industry of the future.

"Our combined scale will extend the reach and influence with which we pursue our common passion: delivering products and services that benefit our customers and the patients we ultimately serve," Binder said.

"With today's announcement we are now additionally committed to blending and maximizing the best of our combined talents, capabilities, technologies and cultures to bring to life a great new company."

This transaction follows a bunch of deals this week among drug makers. For instance, Novartis agreed to buy GlaxoSmithKline's (GSK) oncology business for as much as $16bn and sell its vaccines line to GSK for as much as $7.1bn and its animal health business to Eli Lilly for $5.4bn. Valeant Pharmaceuticals International offered a $45bn takeover bid for botox maker Allergan.

Zimmer was advised by Credit Suisse and received legal advice from White & Case. Biomet was advised by Bank of America Merrill Lynch and Goldman Sachs, and received legal advice from Cleary Gottlieb Steen & Hamilton and Weil, Gotshal & Manges.


Image: Zimmer to combine with Biomet in transaction valued at $13.35bn. Photo: courtesy of PRNewswire/Zimmer Spine, Inc.