Business Context and Reporting Period
This Form 8-K, dated June 24, 2015, reports the completion of the acquisition of Biomet, Inc. by Zimmer Holdings, Inc. Following the merger, the company changed its name to Zimmer Biomet Holdings, Inc. The transaction was executed pursuant to a Merger Agreement dated April 24, 2014.
Key Financial Metrics and Transaction Details
- Total Consideration: Approximately $11.17 billion in cash and 32,703,579 shares of common stock.
- Exchange Ratio: Each LVB share converted to $8.94 in cash plus 0.0562 shares of Zimmer common stock.
- Financing: Funded via cash on hand, $7.65 billion in senior unsecured notes issued in March 2015, and $3.0 billion in borrowings under a 5-year unsecured term loan facility.
- Debt Repayment: Biomet repaid approximately $2.97 billion in credit facilities and redeemed $2.625 billion in senior notes ($1.825 billion 6.500% notes due 2020 and $800 million 6.500% senior subordinated notes due 2020).
- Stock Ticker: Changed from "ZMH" to "ZBH" effective June 29, 2015.
Material Changes Versus Prior Period
The primary material change is the consolidation of Biomet into Zimmer, creating a significantly larger orthopedic device manufacturer. The Board of Directors expanded from 10 to 12 members, adding two directors designated by the LVB sponsors (Michael W. Michelson and Jeffrey K. Rhodes). The company's legal name and corporate bylaws were amended to reflect the merger.
Management Commentary, Risks, and Unusual Items
- Executive Changes: James T. Crines (CFO) and Stephen H.L. Ooi (President, Asia Pacific) stepped down effective June 24, 2015, to retire. Derek M. Davis was appointed Vice President, Global Integration.
- New Appointments: Daniel P. Florin (former Biomet CFO) was appointed Senior Vice President and CFO. Tony W. Collins was appointed Vice President, Corporate Controller and Chief Accounting Officer.
- Compensation: New executives received significant equity awards, including RSUs and stock options with grant date fair values totaling approximately $4.8 million for Mr. Florin and $675,000 for Mr. Collins.
- Financial Statements: Pro forma financial information and financial statements of the acquired business are not included in this filing and will be filed by amendment within 71 calendar days.
Investor Verification Checklist
- Verify the pro forma financial impact of the merger once filed within 71 days.
- Review the terms of the $7.65 billion senior unsecured notes and the $3.0 billion term loan facility for interest rates and covenants.
- Monitor the integration progress of Biomet's operations and the Asia Pacific transition under new leadership.
- Confirm the vesting schedules and performance metrics (iTSR) for the new executive equity awards.
- Check for any subsequent filings regarding the Stockholders Agreement governance provisions.