Zimmer Announces Purchase Of Biomet
Zimmer Holding, Inc. (NYSE and SIX: ZMH) and Biomet today announced that their respective boards of directors have approved a definitive agreement under which Zimmer will acquire Biomet in a cash and stock transaction valued at approximately $13.35 billion, including the assumption of net debt.
The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close in the first quarter of 2015.
The merger of Zimmer and Biomet will position the combined company as a leader in the $45 billion musculoskeletal industry and is aligned with Zimmer’s strategic framework, which focuses on growth, operational excellence and prudent capital allocation. The combined company is expected to deliver attractive growth by offering a more comprehensive and scalable portfolio of solutions with enhanced cross-selling opportunities.
In addition, the combined company is expected to advance innovation to benefit healthcare stakeholders, and stockholders are expected to benefit from a more diversified and predictable revenue mix consistent with the comprehensive portfolio. Upon closing, the transaction is expected to be double-digit accretive to Zimmer’s adjusted diluted earnings per share in the first year. Cash flows from operations are expected to increase by 1.5 times Zimmer’s stand-alone estimates.
“This is a milestone combination that brings together two highly complementary organizations and is consistent with our mission to lead the industry in delivering value to healthcare providers, their patients and stockholders,” said David Dvorak, Zimmer president and CEO. “The transaction positions the combined company as a leader in the musculoskeletal industry with a broad portfolio of products, technologies and services, enabling us to help shape how solutions are developed and delivered.
“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,” continued Dvorak. “Together with Biomet we will expand the scope of our innovation programs and will enhance our efforts to provide integrated services and comprehensive solutions that address the needs of our customers. At the same time, we believe that this merger will further support our long-term growth and stockholder value creation strategies.”
Mr. Dvorak continued, “This combination is about achieving growth and cultivating best- in-class solutions. 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. Both companies share a common set of values and a track record of success integrating acquisitions, which gives me great confidence that we will achieve a smooth transition and capitalize on the opportunity to create a new company that is comprised of the best of Zimmer and Biomet. We look forward to combining the strengths of both teams to restore mobility, alleviate pain and improve the quality of life for patients around the world.”
Biomet’s President and CEO Jeffrey R. Binder said, “The combination with Zimmer will prepare us 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.
“Biomet and Zimmer share a 36-year history of mutual respect,” Binder added. “Both companies are deeply rooted in the communities in which we operate and believe that we can only be successful in business if we are successful in helping healthcare providers improve the lives of patients. We are equally committed to delivering quality products and outstanding clinical results and to legal and ethical behavior in the markets where we do business. And as companies focused almost exclusively in the musculoskeletal industry, we are passionate about orthopaedics and the related medical technology markets that we serve.”
Binder added, “Biomet and Zimmer are blessed with talented team members and independent sales people who are dedicated to their companies and to their customers. 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.”
The combined company will continue to be headquartered in Warsaw, Indiana, maintain regional offices around the world and is anticipated to preserve a long-term commitment to its talented team members. Upon completion of the transaction, David Dvorak will be President and Chief Executive Officer of the combined company. In conjunction with the closing of the transaction, two representatives of Biomet’s principal stockholders will join the combined company’s Board, which will be expanded accordingly. Zimmer and Biomet have highly recognizable and well respected names, and following the closing, the combined company will conduct business under a consolidated name that will leverage the strengths of both brands.
The transaction is valued at $13.35 billion and consists of a combination of cash and common stock. At closing, Zimmer stockholders are expected to own approximately 84 percent of the combined company, and Biomet shareholders are expected to own approximately 16 percent.
Zimmer will host a web conference call at 8 a.m. this morning today. The live audio webcast and accompanying presentation can be accessed via Zimmer’s Investor Relations website at http://investor.zimmer.com. The audio webcast will be archived for replay following the conference.
Individuals who wish to dial into the conference call may do so at 888)-878-3901. A digital recording will be available. To access the recording, US/Canada callers should dial 855-859-2056 or 800-585-8367, or for International callers, dial 404-537-3406, and enter the conference ID15793245.
