Zimmer Biomet Deal Closes

Zimmer Biomet has finally been born.

Zimmer Holdings, Inc. said on June 24, 2015 that is has received U.S. Federal Trade Commission (FTC) clearance for the merger with Biomet Inc. after agreeing to sell its Unicompartmental High Flex Knee (ZUK) system in the U.S. market to Smith & Nephew. The ZUK deal will close within three business days after the Zimmer Biomet deal is closed.

Zimmer Biomet’s President and CEO Dave Dvorak says the $14 billion acquisition is completed and it’s a “momentous achievement.” He even unveiled the new company logo and a new stock market ticker symbol, ZBH. The new symbol will start trading on June 29, 2015. The new company also unveiled its new tagline—”Your progress. Our promise.”

Glenn Novarro of RBC Capital Market said there is “some initial confusion” over when the deal could officially close given the language of a 30-day public comment period. He says that when Johnson & Johnson closed the Synthes deal shortly (June 14, 2011) after the proposed FTC settlement (June 11, 2011), the FTC did not issue its final consent order until August 7.

Nuts and Bolts

The company expects to achieve net annual synergies of approximately $350 million by the third year following closing, with approximately $135 million anticipated in the first 12 months.

The size of the company’s Board of Directors has been increased to 12 members with Michael Michelson and Jeffrey Rhodes appointed to the Board. The two are part of the private investment group that took Biomet private a few years ago and served on the Biomet board.

The deal took about 14 months to review, which is about the same amount of time it took the FTC to approve the JNJ/Synthes deal. This is, says Novarro, “despite the ZMH/Biomet deal having more product overlap and requiring more divestitures to satisfy FTC concerns relative to the JNJ/Synthes deal.”

DJO Global Picks Up Biomet Assets

In addition to Zimmer’s knee system, the FTC also required Zimmer to sell off Biomet’s Discovery Elbow System and Cobalt bone cement assets. Novarro said Biomet’s assets will be sold to DJO Global.

“The coming together of Zimmer and Biomet is a momentous achievement. We are excited to move forward as one company and to pursue new opportunities that benefit patients, healthcare professionals and employees around the globe, ” said Dvorak. “Over the past several months, our integration planning teams have been working to ensure that we capture the best of both companies and create a seamless and efficient transition. I look forward to continuing to work closely with our employees for the benefit of all of our stakeholders.”

So the FTC has given its blessings and Zimmer Biomet execs are executing the asset divestitures required by the FTC. Sounds like a done deal to us.

Warsaw, Indiana, can breathe a little easier and keep polishing its motto as the “Orthopedic Capital of the World.”