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Zimmer makes USD 3 billion offer for Centerpulse
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In a move that could derail Smith & Nephew’s anticipated acquisition of Centerpulse, Zimmer announced in May its offer to buy Centerpulse in a deal worth approximately USD 3.04 billion.
Centerpulse announced June 19 that it received a formal offer from Zimmer of approximately USD 90 in cash and 3.68 Zimmer shares for each Centerpulse share. In a press release, Smith & Nephew officials said they are reviewing the Zimmer offers. “The company strongly advises Centerpulse and InCentive Capital shareholders to take no action in respect of the Zimmer offers,” according to the release. Smith & Nephew’s offers were officially launched on April 25.
Smith & Nephew had announced in March its plans to buy Centerpulse for about USD 2.35 billion. Boards of both companies already unanimously recommended the conditional offer.
Both Smith & Nephew and Zimmer announced intentions to commence related offers for InCentive Capital AG, which has the right to 19% of Centerpulse’s issued shared capital. The European Commission announced recently that it cleared the purchase of Centerpulse by Smith & Nephew.
Zimmer’s acquisition announcement on May 20 stated that the transaction would create the “No. 1 pure-play orthopaedics company in the world, possessing a unique combination of leading market positions, cutting-edge technology and global scale.”
The offer had two conditions relating to product liability litigation and income tax liability, but they were subsequently removed, according to a May press release from Zimmer. Now the offers are essentially the same except that Zimmer’s has higher pricing, a Zimmer spokesperson told Orthopaedics Today in a telephone interview.
An “ideal” partner
In making his company’s bid for Centerpulse, 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 … Zimmer is the ideal partner for Centerpulse.”
Elliott said that Zimmer made 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.”
Centerpulse’s board in Zurich released a statement the same day about the Zimmer offer 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 also 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.”
End date: Aug. 25
On June 12 the Swiss Takeover Board announced procedural recommendations in relation to Smith & Nephew’s offer to acquire Centerpulse AG and InCentive Capital AG, according to a Smith & Nephew press release. The proposed timetable for the competing offers will run concurrently and will potentially have an offer end date of Aug. 25.
The Swiss Takeover Board also recommended that major shareholders of InCentive Capital AG may withdraw shares already tendered to the Smith & Nephew offer.