Zimmer Holdings, Inc. to Combine with Biomet, Inc. in Transaction Valued at $13.35 Billion

WARSAW, Ind., May 6, 2014 /PRNewswire/ — Zimmer Holdings, Inc. (NYSE and
SIX: ZMH) (“Zimmer” or the “Company”) and Biomet, Inc.’s parent company
(“Biomet”) today announced that their respective Boards of Directors have
approved a definitive agreement under which Zimmer will acquire Biomet in a cash
and stock transaction valued at approximately $13.35 billion, including the
assumption of net debt. The transaction, which is subject to customary closing
conditions and regulatory approvals, is expected to close in the first quarter
of 2015.

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The merger of Zimmer and Biomet will position the combined company as a leader
in the $45 billion musculoskeletal industry and is aligned with Zimmer’s
strategic framework, which focuses on growth, operational excellence and prudent
capital allocation. The combined company is expected to deliver attractive
growth by offering a more comprehensive and scalable portfolio of solutions with
enhanced cross-selling opportunities. In addition, the combined company is
expected to advance innovation to benefit healthcare stakeholders, and
stockholders are expected to benefit from a more diversified and predictable
revenue mix consistent with the comprehensive portfolio. Upon closing, the
transaction is expected to be double-digit accretive to Zimmer’s adjusted
diluted earnings per share in the first year. Cash flows from operations are
expected to increase by 1.5 times Zimmer’s stand-alone estimates.

“This is a milestone combination that brings together two highly complementary
organizations and is consistent with our mission to lead the industry in
delivering value to healthcare providers, their patients and stockholders,” said
David Dvorak, Zimmer President and CEO. “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. 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. At the same time, we believe
that this merger will further support our long-term growth and stockholder value
creation strategies.”

Mr. Dvorak continued, “This combination is about achieving growth and
cultivating best-in-class solutions. We have a great deal of respect for what
the management team and employees have accomplished at Biomet, and we are
confident in their ability to be a very important part of the combined
organization as we bring our two world-class companies together and cement
Warsaw, Indiana as the musculoskeletal innovation capital of the world. Both
companies share a common set of values and a track record of success integrating
acquisitions, which gives me great confidence that we will achieve a smooth
transition and capitalize on the opportunity to create a new company that is
comprised of the best of Zimmer and Biomet. We look forward to combining the
strengths of both teams to restore mobility, alleviate pain and improve the
quality of life for patients around the world.”

Jeffrey R. Binder, Biomet’s President and Chief Executive Officer, said, “The
combination with Zimmer will prepare us to compete as a stronger entity in the
medical device industry of the future. 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. 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. And as companies focused almost exclusively in
the musculoskeletal industry, we are passionate about orthopaedics and the
related medical technology markets that we serve.”

Mr. Binder continued, “Biomet and Zimmer are blessed with talented team members
and independent sales people who are dedicated to their companies and to their
customers. With today’s announcement we are now additionally committed to
blending and maximizing the best of our combined talents, capabilities,
technologies and cultures to bring to life a great new company.”

Strategic and Financial Benefits of the Transaction

Zimmer and Biomet believe that the merger positions the combined company for
enhanced innovation opportunities, consistent with Zimmer’s value creation
framework. The complementary nature of the two businesses adds diversity and
scale across various geographies and product categories.

— A more comprehensive portfolio of solutions and commitment to
innovation: Zimmer and Biomet share a commitment to delivering
innovative, cost-effective solutions to address the healthcare system’s
unmet needs. The combined company will offer an even broader range of
personalized solutions that benefit providers, surgeons and their
patients. Through its integrated business model, the combined company
will be positioned to enhance the value chain for its stakeholders.
— Musculoskeletal diversification and scalable platforms: Given the
complementary nature of the portfolios, the combined company will offer
a greater depth and breadth of musculoskeletal solutions to improve
clinical outcomes and patient satisfaction levels. The combination will
enhance enterprise diversification with broader franchises in the Knee,
Hip, Surgical, Spine and Dental categories, as well as in the
faster-growing Sports Medicine, Extremities and Trauma categories.
— Global distribution channels and cross-selling opportunities: Both
Zimmer and Biomet have proven teams of talented and experienced
employees and sales representatives who have strong customer
relationships and are committed to medical training and education.
Zimmer and Biomet expect to leverage complementary sales channels in
major markets to achieve cross-selling opportunities, while also
strengthening their presence in emerging markets through the
combination. The combined company’s broader portfolio is expected to
help its sales force to be more effective in all geographies, increasing
its ability to help physicians and healthcare systems improve patient
outcomes in a cost-effective manner.
— Stronger financial profile and solid earnings accretion: The 2013
combined calendar year revenues of Zimmer and Biomet total approximately
$7.8 billion, with combined adjusted EBITDA of $2.8 billion. The
transaction is expected to be double-digit accretive to Zimmer’s
adjusted diluted earnings per share in the first year following the
closing. Zimmer also expects to achieve net annual synergies of
approximately $270 million by the third year following the closing of
the transaction, with approximately $135 million anticipated in the
first year.
— Strong balance sheet and cash flow generation: The combined company is
expected to generate cash flow from operations of more than 1.5 times
Zimmer’s stand-alone financials. In addition, Zimmer expects the strong
cash flow to enhance the combined company’s future financial flexibility
and allow Zimmer to maintain a stable dividend of 15 to 20 percent of
net income following the closing of the transaction. Finally, the
combined company will be disciplined in how it uses investor capital.
Zimmer is committed to repaying outstanding debt.
Headquarters and Management
The combined company will continue to be headquartered in Warsaw, Indiana,
maintain regional offices around the world and is anticipated to preserve a
long-term commitment to its talented team members. Upon completion of the
transaction, David Dvorak will be President and Chief Executive Officer of the
combined company. In conjunction with the closing of the transaction, two
representatives of Biomet’s principal stockholders will join the combined
company’s Board, which will be expanded accordingly. Zimmer and Biomet have
highly recognizable and well respected names, and following the closing, the
combined company will conduct business under a consolidated name that will
leverage the strengths of both brands.

Financing
The transaction is valued at $13.35 billion and consists of a combination of
cash and common stock. Zimmer will pay $10.35 billion in cash and will also
issue to Biomet’s equity holders an aggregate number of shares of Zimmer common
stock valued at $3.0 billion. The cash portion will be funded by existing cash
on hand, as well as proceeds obtained from a newly committed $3.0 billion senior
unsecured term loan and newly issued senior notes. Zimmer has entered into a
fully executed 364-day bridge facility, which it intends to reduce with the
issuance of permanent financing. In addition, Zimmer expects to refinance
certain of its debt as part of the transaction, including its existing $250
million notes due 2014 and bank debt outstanding, as well as certain Biomet
debt. Zimmer believes that the strong cash flow resulting from the combination
will allow it to pay down debt. The Company expects to maintain its investment
grade credit ratings.

At closing, Zimmer stockholders are expected to own approximately 84 percent of
the combined company, and Biomet shareholders are expected to own approximately
16 percent.

Approvals and Time to Closing
The transaction is expected to close in the first quarter of 2015 and is subject
to, among other things, the expiration or termination of the applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the European Union Merger Regulation, as well as other customary
closing conditions. On April 24, 2014, Zimmer entered into a voting agreement
with the holder of approximately 95% of Biomet’s outstanding common stock,
pursuant to which such stockholder agreed to deliver a written consent.

In connection with the transaction, Biomet Inc.’s parent will withdraw the
registration statement previously filed with the U.S. Securities and Exchange
Commission in connection with its proposed initial public offering.

Advisors
Credit Suisse Securities (USA) LLC is acting as exclusive financial advisor to
Zimmer and White & Case LLP is acting as legal advisor. BofA Merrill Lynch acted
as lead financial and strategic advisor, and Goldman Sachs acted as co-advisor,
to Biomet and its shareholders on this transaction. Cleary Gottlieb Steen &
Hamilton LLP is acting as Biomet’s legal advisor, including as regulatory legal
advisor in Europe, and Weil, Gotshal & Manges LLP is acting as regulatory legal
advisor in the U.S.

Zimmer First Quarter 2014 Earnings Results
In a separate press release issued today, Zimmer announced its earnings results
for the first quarter ended March 31, 2014.

Conference Call, Webcast and Presentation
Zimmer will host a conference call today, April 24, 2014, at 8:00 a.m. Eastern
Time. The live audio webcast and accompanying presentation can be accessed via
Zimmer’s Investor Relations website at http://investor.zimmer.com. The audio
webcast will be archived for replay following the conference.

Individuals who wish to dial into the conference call may do so at (888)
878-3901. International callers should dial (706) 634-9520 and enter the
conference ID15793245. A digital recording will be available. To access the
recording, US/Canada callers should dial (855) 859-2056 or (800) 585-8367, or
for International callers, dial (404) 537-3406, and enter the conference
ID15793245.

About Zimmer Holdings, Inc.
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer designs, develops,
manufactures and markets orthopaedic reconstructive, spinal and trauma devices,
dental implants, and related surgical products. Zimmer has operations in more
than 25 countries around the world and sells products in more than 100
countries. Zimmer’s 2013 sales were approximately $4.6 billion. Zimmer is
supported by the efforts of more than 9,000 employees worldwide.

About Biomet
Biomet, Inc. and its subsidiaries design, manufacture and market surgical and
non-surgical products used primarily by orthopedic surgeons and other
musculoskeletal medical specialists. Biomet’s product portfolio includes hip and
knee reconstructive products; sports medicine, extremities and trauma products;
spine, bone healing and microfixation products; dental reconstructive products;
and cement, biologics and other products. Headquartered in Warsaw, Indiana,
Biomet and its subsidiaries currently distribute products in approximately 90
countries.

Note on Non-GAAP Financial Measures
As used in this press release, the term “adjusted” refers to operating
performance measures that exclude inventory step-up and other inventory and
manufacturing related charges, special items, amortization of acquisition
related transaction financing fees and intangible assets, make-whole payments
connected with debt extinguishments and certain tax adjustments. Included in
special items are acquisition and integration costs and asset impairment charges
related to acquisitions as well as employee termination benefits, consulting and
professional fees, certain litigation matters, dedicated personnel expenses,
certain contract terminations and asset impairment charges connected with global
restructuring and operational excellence initiatives.

Cautionary Statement Regarding Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by the use of forward-looking terms
such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,”
“estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” and
“seeks” or the negative of such terms or other variations on such terms or
comparable terminology. Such forward-looking statements include, but are not
limited to, statements about the benefits of the proposed merger between Zimmer
and LVB Acquisition, Inc. (“LVB”), the parent company of Biomet, including
future financial and operating results, the combined company’s plans,
objectives, expectations and intentions, the expected timing of completion of
the transaction and other statements that are not historical facts. Such
statements are based upon the current beliefs and expectations of Zimmer’s and
LVB’s management and are subject to significant risks and uncertainties that
could cause actual outcomes and results to differ materially. These risks and
uncertainties include, but are not limited to: the possibility that the
anticipated synergies and other benefits from the proposed merger of Zimmer and
LVB will not be realized, or will not be realized within the expected time
periods; the inability to obtain regulatory approvals of the merger (including
the approval of antitrust authorities necessary to complete the transaction) on
the terms desired or anticipated; the timing of such approvals and the risk that
such approvals may result in the imposition of conditions that could adversely
affect the combined company or the expected benefits of the transaction; the
risk that a condition to closing the transaction may not be satisfied on a
timely basis or at all; the risk that the proposed transaction fails to close
for any other reason; the risks and uncertainties related to Zimmer’s ability to
successfully integrate the operations, products and employees of Zimmer and
Biomet; the effect of the potential disruption of management’s attention from
ongoing business operations due to the pending merger; the effect of the
announcement of the proposed merger on Zimmer’s and Biomet’s relationships with
their respective customers, vendors and lenders and on their respective
operating results and businesses generally; risks relating to the value of the
Zimmer shares to be issued in the transaction; access to available financing
(including financing for the acquisition or refinancing of Zimmer’s or Biomet’s
debt) on a timely basis and on reasonable terms; the outcome of any legal
proceedings related to the proposed merger; the risks and uncertainties normally
incidental to the orthopaedic industry, including price and product competition;
the success of the companies’ quality and operational excellence initiatives;
changes in customer demand for Zimmer’s or Biomet’s products and services caused
by demographic changes or other factors; the impact of healthcare reform
measures, including the impact of the U.S. excise tax on medical devices;
reductions in reimbursement levels by third-party payors and cost containment
efforts of healthcare purchasing organizations; dependence on new product
development, technological advances and innovation; shifts in the product
category or regional sales mix of Zimmer’s or Biomet’s products and services;
supply and prices of raw materials and products; control of costs and expenses;
the ability to obtain and maintain adequate intellectual property protection;
the ability to form and implement alliances; challenges relating to changes in
and compliance with governmental laws and regulations, including regulations of
the U.S. Food and Drug Administration (the “FDA”) and foreign government
regulators, such as more stringent requirements for regulatory clearance of
products; the ability to remediate matters identified in any inspectional
observations or warning letters issued by the FDA; changes in tax obligations
arising from tax reform measures or examinations by tax authorities; product
liability and intellectual property litigation losses; the ability to retain the
independent agents and distributors who market Zimmer’s and Biomet’s products;
dependence on a limited number of suppliers for key raw materials and outsourced
activities; changes in general industry and market conditions, including
domestic and international growth rates and general domestic and international
economic conditions, including interest rate and currency exchange rate
fluctuations; and the impact of the ongoing economic uncertainty affecting
countries in the Euro zone on the ability to collect accounts receivable in
affected countries. For a further list and description of such risks and
uncertainties, see Zimmer’s, LVB’s and Biomet’s periodic reports filed with the
U.S. Securities and Exchange Commission (the “SEC”). Copies of these filings, as
well as subsequent filings, are available online at www.sec.gov, www.zimmer.com,
www.biomet.com or on request from Zimmer or Biomet, as applicable. Zimmer,
Biomet and LVB disclaim any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be set forth in the companies’ respective
periodic reports. Readers of this communication are cautioned not to place undue
reliance on these forward-looking statements since, while management believes
the assumptions on which the forward-looking statements are based are
reasonable, there can be no assurance that these forward-looking statements will
prove to be accurate. This cautionary statement is applicable to all
forward-looking statements contained in this communication.

Additional Information and Where to Find It

Zimmer will file with the SEC a registration statement on Form S-4, in which a
consent solicitation statement will be included as a prospectus, and other
documents in connection with the proposed acquisition of LVB. The consent
solicitation statement/prospectus will be sent to the stockholders of LVB.
INVESTORS AND SECURITYHOLDERS OF LVB ARE URGED TO READ the consent
solicitation/prospectus, AND ANY OTHER FILINGS THAT MAY BE MADE WITH THE SEC IN
CONNECTION WITH THE MERGER WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE MERGER. The registration statement and consent
solicitation statement/prospectus and other documents which will be filed by
Zimmer with the SEC, when filed, will be available free of charge at the SEC’s
website at www.sec.gov, or from Zimmer at www.zimmer.com. Such documents are not
currently available. You may also read and copy any reports, statements and
other information filed by Zimmer, LVB and Biomet with the SEC at the SEC public
reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please
call the SEC at (800) 732-0330 or visit the SEC’s website for further
information on its public reference room. Certain executive officers and
directors of LVB have interests in the proposed transaction that may differ from
the interests of stockholders generally, including benefits conferred under
retention, severance and change in control arrangements and continuation of
director and officer insurance and indemnification. This communication shall not
constitute an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to appropriate
registration or qualification under the securities laws of such jurisdiction. No
offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.

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SOURCE Zimmer Holdings, Inc.

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