Medical-device maker Zimmer narrows revenue projection
Zimmer Holdings Inc. completed the acquisition of Biomet in a deal valued at £ 8.9 billion. They also narrowed their revenue projection for the year due to selling several assets in order to complete the transaction.
As part of the deal, Zimmer sold a knee replacement system in the U.S. to British medical technology business Smith & Nephew PLC. They also sold elbow implant and cobalt bone cement rights and assets to California-based DJO Global Inc. to resolve regulatory competition issues.
Zimmer and Biomet are two of the only three substantial competitors in the U.S. for unicondylar knee implants and total elbow implants, and two of only four significant competitors for bone cement, the Federal Trade Commission had said.
The Indiana company will be renamed Zimmer Biomet Holdings Inc. and will trade in the U.S. and Switzerland under the ticker symbol ZBH starting June 29. The combined company's board has been increased to 12 members, including Michael W. Michelson of private-equity firm KKR & Co. and Jeffrey K. Rhodes of TPG Capital.
Zimmer Biomet said it now projects revenue, including Biomet revenue for the comparable period less the assets sold, to increase 1.5% to 2%, compared with its previous view of 1.5% to 2.5%.
For the current quarter, Zimmer Biomet projects profit of $1.55 to $1.58 a share, compared with the consensus of $1.55 a share, according to Thomson Reuters.
The company will release its second-quarter results on July 30.
Standard & Poor's Ratings Services said it cut Zimmer's ratings two notches to triple-B after the deal's closing, citing the combined company's higher debt ratio. To close the deal, the rating firm noted, Zimmer took on about $3 billion in equity and $10 billion of debt.
The outlook is stable, meaning the rating firm doesn't expect to take further action.