Zimmer has completed its acquisition of Biomet in a cash equity transaction valued at about $14 billion.
Zimmer announced its plans to acquire its cross-town rival in Warsaw, Indiana in April 2014, and with today’s closing the newly-named Zimmer Biomet Holdings Inc. becomes the world’s second-largest orthopaedic device company, with estimated market share of 17 percent. Combined, the companies’ orthopaedic revenues reached nearly $7.5 billion in 2014.
Zimmer Biomet leaders affirmed that the acquisition enhances the company’s ability to diversify its revenue mix, create cross-selling opportunities and improve global distribution channels.
An estimated 72 percent of the company’s revenue will derive from joint reconstruction, where the combined company will hold 35 percent of the market share, according to ORTHOWORLD’s Orthopaedic Device Company Profiles: Top Performers (See Exhibit 1). Specifically, the acquisition gives Zimmer Biomet an edge in the knee and hip markets and accelerates its growth—and market position—in arthroscopy/soft tissue, trauma and spine.
Exhibit 1: Zimmer Biomet Worldwide 2014 Revenue by Market Segment
Updated net annual synergies were provided during the acquisition closing announcement. Zimmer Biomet expects synergies of approximately $350 million by the end of its third year, with approximately $135 million synergies anticipated in the first 12 months.
To satisfy regulators, Zimmer agreed to divest U.S. rights and assets for the ZUK unicondylar knee to Smith & Nephew, and U.S. rights and assets for Biomet’s Discovery™ Total Elbow and Cobalt Bone Cement to DJO Global. Lima Corporate acquired the ZUK and Discovery Elbow within the European Economic Area and Switzerland, as well as the Biomet Vanguard™ Complete Knee for Denmark and Sweden.