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Zimmer Biomet Acquires 59% Stake in Medtech SA with Plans to Buy the Remaining Stake in the Future BY ANDREW VAHRADIAN, JULY 19, 2016

Zimmer Biomet acquired a 59% stake in Medtech Société Anonyme, a French-based company that develops surgical robotic technologies to assist surgeons during medico-surgical interventions. The transaction values the business at an approximate enterprise value of $123.5 million, or 9.9x LTM revenues of $12.5 million.

Under the terms of the transaction, Zimmer will acquire 1,406,151 common shares from Mr. Bertin Nahum, the present CEO of Medtech, Newfund and certain other selling stockholders for €50.00 ($55.15) a share. Zimmer will also acquire the outstanding convertible bonds and warrants issued by Medtech to Ally Bridge Group. The price for each convertible bond and warrant are €50.03 ($55.18) and €17.17 ($18.94) respectively.

Zimmer plans to launch an all-cash simplified tender offer to acquire the remaining outstanding shares of Medtech for the same offer price of €50.00 ($55.15) a share in the near future.

Medtech offers its ROSA Spine robotic-assistive system, indicated for minimally invasive surgery (MIS) of the brain and spine. The system aids surgeons not only in the decisive stages of planning and instrument navigation, but also in positioning the implants in the patient’s vertebrae and in neurological procedures conducted in the brain.

The platform employs a robotic arm whose architecture imitates the movements of a human arm, which confers greater dexterity to the surgeon’s movements and complete freedom in the choice of trajectory. The system utilizes 3D imaging to assist with intraoperative planning and to control instrument depth during the procedure. ROSA also incorporates a dynamic guidance system that tracks and responds to patient movements in real-time and compensates for such movements without the necessity to stabilize the system by clamping it onto the spine and surrounding vertebrae.

With ROSA Spine, MedTech is aiming to expand the available MIS options in spine and implement a safer and more efficient treatment by utilizing a smaller incision and reducing radiation exposure for the patient and operating room (OR) staff. Medtech has historically focused more on ROSA's brain application, however this may change under Zimmer's leadership.

This transaction provides Zimmer with a robotics platform that might eventually have applications beyond brain and spine procedures for a relatively low price. This deal gives Zimmer a musculoskeletal robotic platform to compete against Stryker's MAKO System for hips and knees, Smith & Nephew's Navio System for knees, and Mazor and Medtronic's Mazor X robotic system for spine and Globus Medical's developing robotics system for spine surgery.

Medtech will become a wholly-owned subsidiary of Zimmer that will continue to operate out of its current headquarters in Montpellier, France. Mr. Nahum will stay with the company and lead Zimmer's robotic development activities.

To date, this is the fifth acquisition for Zimmer in 2016. The company announced its acquisition of Ortho Transmission, a Colorado-based developer of skeletal implant technology for limb amputee patients in March, the acquisition of Cayenne Medical, a company in the soft tissue repair and reconstruction segment of the sports medicine market in April, the $1.0 billion acquisition of LDR Holding, a developer of surgical implants, devices, and instrumentation for the treatment spinal disorders in June and the acquisition of Compression Therapy Concepts, a developer of medical devices and accessories for the prevention of deep vein thrombosis (DVT) in June.

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