Zimmer Holdings agreed on Thursday to acquire Biomet Inc. in a cash-and-stock deal valued at $13.35 billion, including debt. It will bring together two providers of orthopedic, surgical and dental products.
The deal, which has been approved by the boards of both companies, comes amid a wave of health care and pharmaceutical deals. This week, Novartis and GlaxoSmithKline announced $20 billion in deals, and Valeant made a $45 billion hostile takeover bid for Allergan.
It is also the latest successful exit for private equity. In 2007, Biomet was acquired for $11.3 billion by Blackstone, Goldman Sachs’s buyout group, Kohlberg Kravis Roberts and TPG Capital.
“We believe that current demographic and macroeconomic trends affecting the health care industry will reward companies that successfully partner with other key stakeholders to improve patient care in a cost-effective manner,†said David C. Dvorak, Zimmer’s chief executive. “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.
Zimmer will pay Biomet shareholders $10.35 billion in cash and stock worth $3 billion. Zimmer shareholders will own 84 percent of the combined company, with Biomet shareholders owning 16 percent.
Shares of Zimmer, which had been flat for the year, were up 11 percent in premarket trading.
“Biomet and Zimmer share a 36-year history of mutual respect,†said Jeffrey R. Binder, Biomet’s president and chief executive. “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 health care providers improve the lives of patients.
The companies together had revenue of about $7.8 billion last year, and Zimmer said it expected cost savings of at least $270 million by the third year after the deal’s completion.
The companies said the deal was expected to close in the first quarter of next year.
Also on Thursday, Zimmer reported net sales of $1.6 billion and net earnings of $221 million for the first three months of the year.
Zimmer was advised by Credit Suisse and received legal advice from White & Case. Biomet was advised by Bank of America Merrill Lynch and Goldman Sachs, and received legal advice from Cleary Gottlieb Steen & Hamilton and Weil, Gotshal & Manges.
