OREANDA-NEWS. Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) (Zimmer Biomet or the Company), a global leader in musculoskeletal healthcare, and LDR Holding Corporation (NASDAQ: LDRH) (LDR), a global medical device company focused on designing and commercializing novel and proprietary surgical technologies for the treatment of patients suffering from spine disorders, today announced that both Boards of Directors have approved a definitive agreement under which Zimmer Biomet will commence a tender offer to acquire all of the outstanding shares of LDR for $37.00 per share in cash, which implies a transaction value of approximately $1.0 billion.  The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2016.

Founded in France in 2000, LDR designs and commercializes innovative technologies making surgical procedures easier to perform and providing improved clinical outcomes in the treatment of spine disorders.  The addition of LDR will bolster Zimmer Biomet's presence in the global Spine market and provide the Company with an immediate and a leading position in the fast growing cervical disc replacement (CDR) and MIS segments.  The combination is expected to meaningfully accelerate the growth of Zimmer Biomet's Spine business through the incremental revenues associated with entry into the cervical disc replacement market and cross-portfolio selling opportunities to both Zimmer Biomet and LDR customer bases.

Zimmer Biomet also expects the transaction to accelerate the future growth of its overall business.  With respect to 2016, the Company reiterates its previously provided revenue guidance, an increase of 2.0% to 3.0% as compared to adjusted pro forma full year 2015 on a constant currency basis.  The Company will update its revenue guidance to reflect this transaction at or about the time of closing.  Zimmer Biomet is also reiterating its 2016 adjusted diluted EPS guidance of $7.85 - $8.00.  The transaction is expected to be neutral to adjusted diluted EPS in 2017 and accretive thereafter.

"This highly strategic and complementary transaction will enhance Zimmer Biomet's innovation leadership in musculoskeletal healthcare by adding a premier spine platform to our portfolio of solutions," said David Dvorak, President and CEO of Zimmer Biomet.  "This combination is consistent with our goal of driving meaningful growth across all musculoskeletal markets with innovative products, technologies and services that enhance patient outcomes.  The talented LDR team uniquely shares our deeply held commitment to innovating in a manner that restores mobility and alleviates pain for patients around the world, and we look forward to welcoming them to Zimmer Biomet.  We are confident that the combination of Zimmer Biomet's Spine division and LDR will create a Spine company with the scale, talent and technology portfolio to become a leader in the $10 billion global Spine market."

Christophe Lavigne, Co-Founder, Chairman, President and CEO of LDR, said, "We are delighted with this combination, which will further our commitment to improving spine care by providing greater access to our innovative product offerings for patients around the world, while offering our stockholders immediate cash value.  We have great respect for the Zimmer Biomet team, who shares our passion for innovation as well as our commitment to patients and providers.  We look forward to working closely with Zimmer Biomet to achieve a seamless transition and create lasting value for all of our stakeholders."

Strategic Benefits of the Transaction

  • Enhances Zimmer Biomet's innovative product portfolio:  The combination with LDR is a natural expansion of Zimmer Biomet's Spine business.  LDR's talent, culture and track record of innovation is evidenced by its primary product offerings based on its Mobi-C® cervical disc replacement device and MIVo™ portfolio to support lumbar and cervical fusion procedures, both of which are complementary to Zimmer Biomet's current portfolio.  Combined, Zimmer Biomet and LDR create a differentiated and comprehensive Spine portfolio, improving Zimmer Biomet's position for sustainable growth.
  • Positions Zimmer Biomet as a market leader in CDR:  CDR represents the fastest growing segment within the $10 billion Spine industry.  LDR's Mobi-C CDR device has been well received in the market as the first and only device FDA approved to treat both one- and two-level adjacent damaged cervical discs.  Long-term clinical studies for Mobi-C have demonstrated the efficacy of this unique technology, with Mobi-C showing superiority to fusion for two-level procedures.  These excellent clinical outcomes coupled with market-leading ease of use are expected to drive further market penetration as a part of Zimmer Biomet's Spine portfolio.  Finally, the combination positions Zimmer Biomet to leverage its scale and resources to accelerate the development of the CDR market globally. 
  • Significant opportunity to leverage expanded commercial channel:  The Company expects to capture cross-portfolio selling opportunities to both Zimmer Biomet and LDR customer bases.  Zimmer Biomet anticipates enhancing LDR's product growth and reach by capitalizing on an expanded combined distribution channel in the U.S. and key international Spine markets.  The combination also will create a comprehensive Spine portfolio with innovative surgical solutions that place Zimmer Biomet in an advantaged position to compete for large hospital vendor contracts.

Financing

Zimmer Biomet plans to finance the transaction using cash balances on hand and existing availability under its revolving credit facility and expects to maintain an investment grade profile.  Following consummation of the transaction, Zimmer Biomet plans to issue $750 million of senior unsecured notes, the proceeds of which will be used to repay the credit facility. Zimmer Biomet intends to maintain its previously discussed deleveraging strategy. 

Organization and Leadership

Upon consummation of the transaction, LDR will be combined with Zimmer Biomet's Spine & CMF category and will be led by Adam Johnson, Zimmer Biomet Group President, Spine, CMF and Thoracic, and Dental.  Christophe Lavigne, Co-Founder, Chairman, President and CEO of LDR and Patrick Richard, Co-Founder of LDR and Executive Vice President and General Manager of LDR M?dical, are committed to driving the benefits of this transaction and will remain with the Company in key leadership positions within the global Spine business.  To leverage talent and product expertise from both companies, Zimmer Biomet plans to complement the Spine business headquarters in Broomfield, Colorado by maintaining a significant presence in LDR's strong technology hubs of Austin, Texas and Troyes, France.

Transaction Structure, Approvals and Time to Closing

The transaction is structured as an all-cash tender offer for all outstanding shares of LDR common stock at a price of $37.00 per share, followed by a merger in which each share of LDR common stock that is not tendered pursuant to the tender offer would be converted into the right to receive in cash $37.00 per share.

The transaction is subject to the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the tender of a majority of the outstanding LDR shares in the tender offer and other customary closing conditions. The transaction is expected to close in the third quarter of 2016.

Advisors

Goldman, Sachs & Co. is acting as financial advisor to Zimmer Biomet and White & Case LLP is acting as legal advisor. BofA Merrill Lynch is acting as financial advisor to LDR and Andrews Kurth LLP is acting as legal advisor.

Conference Call

Zimmer Biomet and LDR will host a joint conference call today, Tuesday, June 7, 2016 at 8:00 AM Eastern Time to discuss the transaction.  Interested parties may join the conference call by dialing 1-888-408-5523 in the United States or +1-480-629-9848 from outside of the United States.  The conference identification number is 4725679.  Interested parties are invited to listen to the webcast of the conference call, which can be accessed by visiting the Investor Relations section of Zimmer Biomet's website at www.zimmerbiomet.com.

A digital recording will be available through July 5, 2016 by dialing 1-800-406-7325 in the United States and +1-303-590-3030 from outside of the United States and using the conference identification number 4725679.  A webcast replay will also be available for a limited period on Zimmer Biomet's website in the Investor Relations section.