NEW YORK (The Deal) -- Zimmer Holdings (ZMH) 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."

Zimmer said the cash portion of the deal would be funded with funds on hand as well as proceeds from a newly-committed $3 billion senior unsecured term loan and newly issued senior notes. The company has entered into a fully executed 364-day bridge facility and expects to refinance certain debt as part of the deal.

Post-deal Dvorak would remain CEO, with Zimmer expected to name two representatives from among Biomet's owners to join its board.

The deal continues a stampede of transactions among health care firms. This week alone Valeant Pharmaceuticals International  (VRX) teamed with activist Bill Ackman on a $45 billion hostile bid for Botox maker Allergan (AGN - Get Report), while Novartis said it would take a host of oncology drugs from GlaxoSmithKline for $16 billion while selling other units to the British drugmaker.

Zimmer was advised by Credit Suisse Securities (USA) and White & Case LLP. A Bank of America Merrill Lynch team including Joe Kohls, Michael McIvor, Milton Hsu and Sravan Emany acted as lead financial adviser to Biomet, assisted by Goldman Sachs.

A Cleary Gottlieb Steen & Hamilton team including partners Robert Davis, Jeff Karpf, Arthur Kohn, Meme Peponis and F. Enrique Gonzalez-Diaz is advising Biomet, with Weil Gotshal & Manges acting as regulatory legal advisor in the U.S.

A Ropes & Gray team including partners Neill Jakobe, Asheesh Goel, Laura Hoey, Joy Liu, Michael Beauvais and Marc Cavan also advised Biomet.