More than two months after Zimmer announced intentions to acquire Biomet, the United States Federal Trade Commission requested additional information on the companies.
Here are five updates on the transaction:
1. This second request from the FTC was issued under the notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Zimmer focuses on designing, developing and manufacturing orthopedic reconstructive, spinal and trauma devices, dental implants and related surgical products. Biomet also designs, manufactures and markets orthopedic and musculoskeletal surgical and non-surgical products as well as dental reconstructive products.
2. The request for information will extend the antitrust waiting period for 30 days after Zimmer and Biomet have substantially complied with the request, unless the period is extended voluntarily by the companies. The FTC can also terminate the period sooner.
In the first quarter of 2014, Zimmer reported a slight increase in net earnings to $221.5 million and also saw an increase in net sales, although initial costs from the transactions were excluded from the company's adjusted earnings measure. In the second quarter of the 2014 fiscal year, Biomet saw a 4.5 increase in net sales, helped by the company's 2012 acquisition of DePuy Orthopaedics' trauma products — which occurred so DePuy's parent company, Johnson & Johnson, could acquire Synthes.
3. The deal has been approved by both company boards and if it goes through, Biomet will become a public company again. Biomet was in the process of filing an initial public offering when the $13.35 billion acquisition was announced. The IPO was, in part, to pay off debt from the 2007 buyout, according to a Wall Street Journal report.
4. The two companies plan to continue working with the FTC as it reviews the deal. Zimmer's stock opened at $104.35 on July 2, with a market cap of $17 billion. The company's 52 week high is $108.33.
5. The deal is expected to close during the first quarter of 2015. There have been several other key acquisitions announced since this one was announced in April, including Medtronic's plans to acquire Covidien and Stryker's plans to acquire assets from Small Bone Innovations.
"Competition just got tougher as Zimmer will effectively surpass Stryker to attain the number two spot in orthopedic sales and is now in prime position to compete with market leader Johnson & Johnson," said Frost & Sullivan Advanced Medical Technologies Research Analyst Tara Shelton after the acquisition was announced. "With the deal not closing until early 2015, the effect has yet to be seen in regards to future employment, commodity pricing and innovation."
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