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Zimmer makes $3 billion bid for Centerpulse
In a move that could derail Smith & Nephew’s anticipated acquisition of Centerpulse, Zimmer announced its offer to buy Centerpulse in a deal worth approximately $3.04 billion. Smith & Nephew announced in March its plans to buy Centerpulse for about $2.35 billion; boards of both companies have already unanimously recommended the conditional offer.
Zimmer’s announcement on May 20, as Orthopedics Today went to press, stated that the transaction would create the “#1 pure-play orthopaedics company in the world, possessing a unique combination of leading market positions, cutting edge technology, and global scale.”
Ray Elliott, Zimmer chairman and CEO, released a letter to Centerpulse Chairman and CEO Max Link stating that Zimmer and Centerpulse had “discussed a potential business combination” several times over the past year and that the two companies had “mutually agreed Centerpulse is the ideal partner for Zimmer and … that Zimmer is the ideal partner for Centerpulse.”
Competing bidder
Elliott said that Zimmer had given a preliminary written offer in October “that indicated we were prepared to increase our offer based upon new information. We are increasing our offer now.” He said he had been surprised that Centerpulse had not given Zimmer a confidential memorandum, “which would have enabled us to make a superior offer, before proceeding with an agreement with Smith & Nephew.”
Zimmer has been advised, Elliott said, that to preserve its rights as a competing bidder under Swiss law, it must make a proposal by pre-announcement filings with the Swiss Takeover Board. Elliott said that his company prefers to work with Link and his board “to complete this transaction and we are prepared to commit all the necessary resources to do so.”
The Board of Centerpulse in Zurich released a statement the same day about the Zimmer offer. “Centerpulse wishes to clarify that on a number of occasions it had sought to include Zimmer in the process to sell the company … Centerpulse confirms that Zimmer was contacted but declined to participate in the process.”
The statement said that the Centerpulse board wants to act in the best interest of its shareholders, customers and employees, and that it “intends to comply fully with its obligations under the Swiss Takeover Code with regards to the proposal received from Zimmer.” The company is “evaluating the value, the conditions to and the certainty of execution of Zimmer’s proposal and intends to make a further announcement in due course.”
Smith & Nephew issued a statement on May 20 that it will continue to monitor the developing situation.