By Maria Armental
Zimmer Holdings Inc. on Wednesday narrowed its revenue
projection for the year as it sold several assets in order to
complete the acquisition of Biomet in a deal valued at $14
billion.
As part of the deal, Zimmer sold a knee replacement system in
the U.S. to British medical technology business Smith & Nephew
PLC and 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 deal with Smith & Nephew is set to close within three
days. Financial terms weren't disclosed.
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.
Zimmer shares rose 1.1% to $113.89 in early afternoon
trading.
Write to Maria Armental at maria.armental@wsj.com
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