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Orthopedic and Dental Industry News Complete Archive »

Zimmer Biomet to Acquire LDR Holding for $1.0B BY ANDREW VAHRADIAN, JUNE 7, 2016

Zimmer Biomet entered into an agreement to acquire LDR Holding Corporation in an all-cash transaction for an enterprise value of $1.0 billion, valuing LDR at 6.1x LTM revenues of $167.7 million.

Under the terms of the transaction, Zimmer will make an all-cash tender offer to acquire all of LDR's outstanding shares for $37.00 a share. The deal yields shareholders with a 64% premium based on LDR’s closing price of $22.58 on Monday, June 6th.

LDR develops surgical implants, devices, and instrumentation for the treatment spinal disorders. The company's primary products are its VerteBRIDGE fusion and Mobi non-fusion platforms, both designed for applications in the cervical and lumbar spine.

VerteBRIDGE is the first interbody device platform with integrated fixation that can be implanted without screws, resulting in a zero-profile construct without hardware protruding outside of the vertebral body. The company introduced VerteBRIDGE in 2007, and since then, it has been used in more than 100,000 device implantations globally.

Mobi-C is the first and only cervical disc replacement device with FDA clearance for both one-level and two-level cervical disc replacement procedures, and is implanted without the use of keels or screws, which allows for a less invasive, and more simplified and bone sparing surgical approach. Since introduced by LDR in 2004, Mobi-C has been used in more than 40,000 device implantations globally.

The transaction bolsters Zimmer's presence in the cervical disc replacement (CDR) and MIS segments and provides cross-portfolio selling opportunities to both company's customer bases. Management maintains that LDR's product portfolio is complementary to Zimmer's and that the company can further penetrate markets and accelerate its growth profile within spine by leveraging an expanded commercial channel.

Upon closing, LDR will be combined with Zimmer's Spine & CMF business and will be led by Zimmer Group President, Spine, CMF and Thoracic, and Dental, Adam Johnson. Christophe Lavigne, Co-Founder, Chairman, President & CEO of LDR and Patrick Richard, Co-Founder of LDR and Executive VP and General Manager of LDR M├ędical, will serve in key leadership positions within the combined business segment. Furthermore, Zimmer plans to maintain a significant presence in LDR's headquarters of Austin, TX and technology hub in Troyes, France, in order to complement its spine headquarters in Broomfield, CO.

Zimmer intends to finance the transaction using cash balances on hand and existing availability under its revolving credit facility (RCF). Upon closing, Zimmer plans to issue $750 million of senior unsecured notes, the proceeds of which will be utilized to repay the credit facility.

The deal is expected to be neutral to Zimmer's adjusted diluted earnings per share (EPS) in 2017 and accretive thereafter. The transaction is expected to close in 3Q:16.

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