Pictured today are the Warsaw headquarters of Zimmer (above) and Biomet. Photos by Gary Neiter, Times-Union.
Pictured today are the Warsaw headquarters of Zimmer (above) and Biomet. Photos by Gary Neiter, Times-Union.
Zimmer will acquire Biomet for $13.35 billion in a deal the two companies announced today.
The boards of directors of both orthopedic manufacturers approved the buy, which will see Zimmer pay $10.35 billion in cash and issue to Biomet equity holders $3 billion in shares. The combined company will remain in Warsaw under a consolidated name with Zimmer CEO David Dvorak as president, according to the announcement.
The deal, expected to close early next year, is projected to increase Zimmer’s cash flow by 1.5 percent and allow it to pay down outstanding debt. Revenue for both companies together totalled close to $7.8 billion last year; Zimmer alone saw about $4.6 billion in sales.
Zimmer stockholders will own approximately 84 percent of the combined company and Biomet stockholders 16 percent, and two representatives of Biomet’s principal shareholders will sit on the combined board. As part of the deal, Biomet will withdraw its filing made in preparation for a proposed return to the public market.
The announcement does not specifically address the effect of the buy on employment numbers at both companies, only that it “is anticipated to preserve a long-term commitment to its talented team members.” Jim Gill, Zimmer director of public relations, said this morning that “some natural attrition” is expected but no decisions have been made on employee impact.
“We will be meeting with employees over the coming days, letting them know what’s happening and answer their questions. It’s still early but we’ll be letting them know what opportunities there are,” he said, also noting that the companies are very complementary and the acquisition will produce “a larger, more diverse business with a lot of growth opportunities.”
Dvorak said in the announcement both companies’ shared values and track record of integration is expected to produce a smooth transition and create a new company “comprised of the best of Zimmer and Biomet.”
“This is a milestone combination that brings together two highly complementary organizations,” he said. “The transaction positions the combined company as a leader in the musculoskeletal industry with a broad portfolio of products, technologies and services, enabling us to help shape how solutions are developed and delivered. 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.”
Biomet CEO Jeffrey R. Binder said the combination with Zimmer will “bring to life a great new company” and prepare them to compete as a stronger entity in the medical device industry.
“Our combined scale will extend the reach and influence with which we pursue our common passion: delivering products and services that benefit our customers and the patients we ultimately serve,” he said. “Biomet and Zimmer share a 36-year history of mutual respect. Both companies are deeply rooted in the communities in which we operate and believe that we can only be successful in business if we are successful in helping healthcare providers improve the lives of patients. We are equally committed to delivering quality products and outstanding clinical results and to legal and ethical behavior in the markets where we do business.”
Founded in 1927, Zimmer employs over 9,000 people in more than 25 countries globally, and sells products in over 100 countries. Biomet, founded in 1977, distributes medical device products in 90 countries.
Biomet was acquired in 2007 for about $11.3 billion by KKR & Co., TPG, Blackstone Group and the buyout arm of Goldman Sachs Group Inc. It announced in March plans for a $52 million five-year expansion in Warsaw.

Edited 10:58 a.m.: added comment on employee effects.