Zimmer Biomet (NYSE:ZBH) said today it is buying spinal medical device company LDR Holding for approximately $1 billion.
Boards from both companies approved the acquisition agreement, the company said, with Zimmer Biomet slated to acquire all outstanding shares of LDR at $37 per share in cash. The company expects the deal to close in the 3rd quarter of 2016.
LDR Holding develops and sells spinal-procedure focused products, and the acquisition will “bolster Zimmer Biomet’s presence in the global spine market,” the Warsaw, Ind.-based company said
LDR’s primary products are the Mobi-C cervical disc replacement and Mivo portfolio of products supporting lumbar and cervical fusion procedures. LDR received FDA premarket approval for its Mobi-C cervical disc replacement device in 2013, indicated for treating 1 and 2-level cervical disc disease.
“This highly strategic and complementary transaction will enhance Zimmer Biomet’s innovation leadership in musculoskeletal healthcare by adding a premier spine platform to our portfolio of solutions. This combination is consistent with our goal of driving meaningful growth across all musculoskeletal markets with innovative products, technologies and services that enhance patient outcomes. The talented LDR team uniquely shares our deeply held commitment to innovating in a manner that restores mobility and alleviates pain for patients around the world, and we look forward to welcoming them to Zimmer Biomet. We are confident that the combination of Zimmer Biomet’s Spine division and LDR will create a Spine company with the scale, talent and technology portfolio to become a leader in the $10 billion global Spine market,” CEO David Dvorak said in a press release.
Zimmer Biomet reiterated its previously provided revenue guidance, saying the transaction is expected to be neutral against adjusted diluted EPS in 2017 and accretive thereafter, and said it will update the guidance to include the transaction upon time of closing.
Upon completion of the deal, LDR will be folded into Zimmer Biomet’s Spine & CMF businesses, led by group prez Adam Johnson. LDR CEO Christophe Lavigne and LDR co-founder and GM Patrick Richard will remain with the company in “key leadership positions” within the spine biz, the company said.
“We are delighted with this combination, which will further our commitment to improving spine care by providing greater access to our innovative product offerings for patients around the world, while offering our stockholders immediate cash value. We have great respect for the Zimmer Biomet team, who shares our passion for innovation as well as our commitment to patients and providers. We look forward to working closely with Zimmer Biomet to achieve a seamless transition and create lasting value for all of our stakeholders,” Lavigne said in prepared remarks.
The deal will be financed through cash balances on hand and under its revolving credit facility, Zimmer Biomet said. The company also plans to issue $750 million in senior unsecured note, with funds raised slated to repay the credit facility.
In March, Zimmer Biomet said it closed its buyout of Cayenne Medical and its soft tissue reconstruction devices for an unspecified amount.
Scottsdale, Ariz.-based Cayenne makes devices for knee and shoulder repair, including the AperFix II, CrossFix II and iFix knee ligament reconstruction and meniscal repair devices and the Quattro device for rotator cuff and labral repairs.
When it announced the buyout in April, Zimmer Biomet said the acquisition would strengthen its sports medicine business.
