NEW YORK (The Deal) -- Zimmer Holdings (ZMH - Get Report) on Thursday said it would acquire private equity-owned Biomet in a $13.35 billion cash and stock deal that would expand the maker of artificial joints into new orthopedic devices.
Terms of the deal call for Warsaw, Ind.-based Zimmer to pay $10.35 billion in cash and also issue $3 billion worth of its shares to Biomet owners, leaving Zimmer shareholders in control of about 84% of the combination post-deal.
Biomet is currently owned by a consortium including Blackstone (BX - Get Report), TPG Capital, Kohlberg Kravis Roberts & Co. and Goldman Sachs (GS - Get Report), which acquired it in 2007 for $11.3 billion.
As part of the deal Biomet is withdrawing a planned initial public offering.Biomet is a maker of surgical and non-surgical products used by orthopedic surgeons and other musculoskeletal specialists, including hip and knee reconstructive products, sports medicine and trauma products and spine and dental products. Zimmer said the deal would create a leader in what it says is a $45 billion musculoskeletal surgery industry, with a more diverse portfolio and increasing cash flow compared to the company as a standalone. The combination would have pro forma annual Ebitda of about $2.8 billion on sales of $7.8 billion, with Zimmer also pledging upwards of $270 million in net annual synergies by year three. "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," Zimmer CEO David Dvorak said in a statement. "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."