LDR Holding Corporation (LDRH) Surges on Rival Takeover Bid
Shares of Austin, Texas, based LDR Holding Corporation (LDRH) rose sharply on Tuesday, against the backdrop of a mixed day for stocks overall. LDR's stock was up 63.82%, rising $14.41 per share, to close at $36.99, on volume of 27,977,064 shares. The company announced early Tuesday morning that rival Zimmer Biomet Holdings Inc. (ZBH) will acquire LDR at a price of $37 per share.
Founded in 2000, LDR Holding Corp. is a medical device company that is focused on designing and commercializing surgical technologies for the treatment of patients suffering from spine disorders.
In a deal announced before the market opened on Tuesday, Zimmer Biomet will commence a tender offer to acquire all of the outstanding shares of LDR Holding Corporation for $37 per share. That gives the acquisition a total transaction value of about $1 billion. The deal is expected to close in the third quarter of 2016, subject to customary closing conditions. The boards of directors of both companies have approved a definitive agreement on the acquisition.
The acquisition of LDR is expected to "meaningfully" accelerated growth in Zimmer Biomet's spine business through additional revenues expected to result from the entry into the cervical disc replacement market (LDR's Mobi-C cervical disc replacement device and MIVo portfolio to support lumbar and cervical fusion procedures), as well as cross-portfolio selling to the customer bases of both companies.
Zimmer's stock closed down 1.74% on the news of the acquisition, falling $2.11 per share, to close at $119.43, on volume of 4,131,676 shares. The company plans to complete the acquisition using cash balances on hand, as well as existing availability under a revolving credit facility. It then expects to issue $750 million of senior unsecured notes, which will be used to repay the credit facility.
"We are delighted with this combination, which will further our commitment to improving spine care by providing greater access to our innovative product offerings for patients around the world, while offering our stockholders immediate cash value," said LDR Co-Founder, Chairman, President and CEO, Christophe Lavigne. "We look forward to working closely with Zimmer Biomet to achieve a seamless transition and create lasting value for all of our stakeholders."
Founded in 1927, Warsaw, Indiana, based Zimmer Biomet Holdings Inc. (ZBH) designs, develops, manufactures, and markets orthopedic reconstructive, spinal and trauma devices, biologics, dental implants and related surgical products. Its products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. It has operations in America, Europe and Asia Pacific. The company's stock trades on the New York Stock Exchange.
"This highly strategic and complementary transaction will enhance Zimmer Biomet's innovation leadership in musculoskeletal healthcare by adding a premier spine platform to our portfolio of solutions," said Zimmer Biomet President and CEO, David Dvorak. "This combination is consistent with our goal of driving meaningful growth across all musculoskeletal markets with innovative products, technologies and services that enhance patient outcomes...We are confident that the combination of Zimmer Biomet's Spine division and LDR will create a Spine company with the scale, talent and technology portfolio to become a leader in the $10 billion global Spine market."
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