Zimmer-Biomet Merger Gets Conditional Approval From EU Regulators
By Jof Enriquez,
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The European Commission (EC) recently gave a conditional approval to the proposed merger between orthopedic device manufacturers Zimmer Holdings and Biomet.
“The EC’s clearance is conditioned upon Zimmer entering into agreements with a suitable buyer to divest certain assets comprising the remedy package previously submitted to the EC. Zimmer expects to enter into such agreements in the near term,” Zimmer stated in a recent press release.
Zimmer confirmed that the proposed merger is on track to be completed by April 2015. The deal has also been cleared by the Japan Fair Trade Commission. The U.S. Federal Trade Commission (FTC) has yet to approve the merger agreement.
Under the deal announced last April, Zimmer will pay $10.35 billion in cash and $3.0 billion in common stock to acquire Biomet, while also assuming Biomet’s outstanding debt.
According to the Wall Street Journal, the EC allowed the merger to proceed contingent on two conditions: that Zimmer divest a knee-implant business in the European Economic Area, and that Biomet sell an elbow-implant unit in the region, as well as a knee-implant business in Denmark and Sweden.
The said businesses must be sold “to one or several purchasers capable of running the businesses as a competitive force in the market,” the EC said in statement, according to the WSJ. Both Biomet and Zimmer reportedly agreed not to close the transaction unless suitable buyers are known and cleared by regulators.
The conditions set are meant to allay antitrust issues that can result from the merger between two of the largest orthopedic device makers in the world. Specifically, the EC was worried that the deal — the fifth largest medical device industry transaction in the past decade — could raise prices for orthopedic implants in European countries.
The divestments of the aforementioned businesses “will ensure that patients continue to benefit from sufficient choice and innovation and that health-care providers enjoy competitive prices,” the EU’s antitrust chief, Margrethe Vestager, said in a statement.
Regulators in the EU last year suspended the mandatory review of the merger because the initial notification submitted by Zimmer was deemed incomplete. Zimmer then submitted in February a revised remedy package that would facilitate the review of the merger.
Having secured the approval of the EC and the Japan Fair Trade Commission, Zimmer and Biomet will now only have to satisfy the requirements set by one remaining major regulator, the FTC. The U.S. antitrust regulator last year gave the two companies a second request for additional information about their proposed merger, in accordance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).