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A flurry of billion-dollar healthcare and pharmaceutical deals have already been reported this week, and Thursday brought another big one.
Zimmer Holdings Inc. (NYSE: ZMH) announced today it will buy privately held Biomet Inc. in a cash and stock transaction valued at $13.35 billion. The deal, approved by both company boards and expected to close in Q1 of 2015, joins two top providers of orthopedic, surgical, and dental products.
Investors applauded the deal and sent Zimmer shares soaring nearly 20% intraday to a 52-week high of $108.33. An hour into trading, more than 4 million shares changed hands, about four times Zimmer's average daily volume. By noon, volume was up to 7.6 million shares.
With Wall Street showing its approval, Zimmer touted the tie-up.
"We believe that current demographics 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 Zimmer Chief Executive Officer (CEO) David C. Dvorak in a statement. "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."
Biomet shareholders include private equity groups Blackstone, Goldman Sachs' buyout team, Kohlberg Kravis Roberts, and TPG Capital. The consortium took Biomet private in 2007 for $11.4 billion. They will receive $10.35 billion in cash, and stock worth $3 billion, giving them 16% ownership in the combined company.
And, it sounds like the companies will merge easily…
"Biomet and Zimmer share a 36-year history of mutual respect," Jeffrey R. Binder, Biomet's President and CEO, said in a statement. "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 deal should also improve Zimmer's stock performance…