Zimmer Will Sell U.S. Assets To Complete Biomet Merger

Zimmer Holdings Inc. announced recently that it will sell off some of its United States-based business assets to comply with preconditions, set by the Federal Trade Commission (FTC) as part of Zimmer’s proposed merger with fellow orthopedic products manufacturer Biomet, Inc.

According to a press release, Zimmer has finalized deals, with unspecified buyers, to sell certain assets among its Zimmer Unicompartmental High-Flex Knee System, Biomet Discovery Elbow System, and Cobalt bone cement product lines. 

"Zimmer continues to work constructively with the Bureau of Competition Staff of the U.S. Federal Trade Commission (the "FTC" and, such staff, the "FTC Staff") and is highly confident that within the next few weeks it can finalize the agreement in principle it reached previously with FTC Staff to resolve FTC Staff's competitive concerns regarding the proposed acquisition," the company stated in the release.

The deals are subject to further FTC review and approval by the FTC Commissioners, and will have to satisfy the usual closing conditions for divestiture agreements under federal law.

Biomet's proposed $13.4 billion merger with Zimmer is believed to be the fifth-largest medical device industry transaction of the past decade. The deal between the erstwhile cross-town rivals — both based in Warsaw, Ind. — will create the second-largest company in the $45 billion orthopedic and dental product market, trailing only Johnson & Johnson.

Such a sizable deal warranted antitrust concerns from the FTC, which last year requested additional information about the deal from both companies. Both manufacturers have since provided the FTC with that additional data..

“Zimmer and Biomet will continue to work closely with the FTC as it conducts its review of the proposed transaction. The proposed transaction remains subject to the expiration or termination of the waiting period under the HSR Act (Hart–Scott–Rodino Antitrust Improvements Act of 1976), antitrust clearance in certain foreign jurisdictions as well as other customary closing conditions,” stated a joint news release from both companies.

European regulators also requested more information about the transaction, and Zimmer provided a "revised remedy package" to facilitate the review. The European Commission (EC), in April, granted conditional clearance to the pending merger, contingent upon Zimmer divesting two of its European knee implant businesses and one elbow implant business in the near future.

The Japan Fair Trade Commission also recently granted clearance to the proposed merger, leaving the FTC as the sole major regulator yet to approve the transaction. However, Zimmer stated in its press release that finalizing the divestiture of its U.S. assets may be only weeks away, and the company expects its deal with Biomet to close as planned by mid-June.