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LDR Holding Corp.
(NASDAQ: LDRH) , a medical device company focused on treatment of
spinal disorders, are having a wonderful day. The company's
shares were up more than 63% as of 10:45 a.m. ET Tuesday after
news broke that it is being acquired by
Zimmer Biomet Holdings
(NYSE: ZBH) .
Zimmer Biomet has offered $1 billion to acquire LDR in an
all-cash deal, valuing the target's shares at $37 each, a strong
68% premium to Monday's closing price.
The boards of directors from both companies have already
approved the transaction, and the deal is expected to close in
the third quarter. Zimmer Biomet will be funding the transaction
with a combination of cash on hand and existing credit
facilities, but once the deal closes, the company plans to issues
$750 million worth of notes to repay the credit facilities.
"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 CEO David
He also stated that bringing LDR into the fold will give the
company everything that it needs to become a leader in the global
spine care market, a $10 billion market.
LDR Holding's co-founder and CEO Christophe Lavigne also
praised the deal, stating:
"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. We have great respect for the Zimmer
Biomet team, who shares our passion for innovation as well
as our commitment to patients and providers."
Zimmer Biomet is not expecting this deal to alter the company's
earnings projections for the year.
Management reiterated its 2016 adjusted diluted EPS
guidance of $7.85 to $8.00, and said it expects the
transaction will be accretive to earnings after 2017.
Congratulations are in order to long-term shareholders of LDR
Holdings. The company's stock has taken investors on a wild ride
since it first hit the public markets in late 2013, but after
today's move shares have handily outperformed the
With shares trading within a few pennies of the board-approved
acquisition price, and with a firm cash offer in hand, investors
in LDR Holdings might want to cash in their chips today and start
to hunt for their next home-run stock.
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