Indiana-based Zimmer Biomet Holdings Inc. has agreed to buy LDR Holding Corp. for about $1 billion in cash to add surgical technologies for the treatment of patients with spine disorders.
The $37-a-share offer has been approved by both boards, the companies said in a written statement Tuesday. That represents a 64 percent premium to LDR’s Monday closing price of $22.58 per share. LDR’s shares have lost 49 percent in the last 12 months.
Warsaw-based Zimmer, with a market valuation of $24.2 billion, is one of the U.S.’s biggest manufacturers of replacement hips and knees and other reconstructive and orthopedic devices.
Austin, Texas-based LDR had 2015 sales of $164.5 million, most of which came from spinal devices that are used in disc replacements and spinal fusions. Zimmer estimates the size of the spinal device market at around $10 billion a year.
The deal will help Zimmer increase its share of the spine market from about 5 percent to 7 percent and move from No. 6 to No. 5 in that sector, according to Larry Biegelsen, a Wells Fargo Securities analyst in New York who rates the shares “outperform.”
LDR shares gained 64 percent, to $36.92, in trading before U.S. markets opened.
The transaction is expected to close in the third quarter, and Zimmer said the deal will start adding to its adjusted earnings after 2017.
Goldman Sachs Group Inc. served as Zimmer’s financial adviser, and White & Case LLP as legal adviser. BofA Merrill Lynch was LDR’s financial adviser, and Andrews Kurth LLP was legal adviser.