Zimmer, Up 324% in Four Months, Announces
Another Acquisition
11/25/03
Yesterday Zimmer Holdings announced plans to acquire Implex
Corp. On July 31, 2003, we recommended buying call options
for Zimmer. These options are now up 324% in four months (an
annual rate of 972%). For our less aggressive subscribers,
we recommended buying Zimmer Holding stock two years ago.
The value of the stock has increased 105% in that time. The
company's press release follows:
11/24/03
WARSAW, Ind., Nov 24, 2003 /PRNewswire-FirstCall via Comtex/
-- Zimmer Holdings, Inc. (NYSE: ZMH) (SWX: ZMH) and Implex
Corp., a privately held New Jersey company, announced today
that Zimmer has agreed to acquire Implex in a transaction
comprised of Zimmer common stock and a customary cash escrow.
Under the agreement, Implex will become a wholly owned subsidiary
of Zimmer. Each share of Implex stock will be converted into
the right to receive Zimmer common stock and cash having a
value of approximately $108 million at closing and additional
value in the form of Zimmer common stock payments that are
contingent on growth of Implex product sales through 2006.
The net value transferred at closing in Zimmer common shares
will be approximately $89 million, which includes adjustments
for debt repayment, Zimmer's existing equity, escrow and other
items. This transaction is expected to be dilutive to earnings
per share by approximately $0.01 in 2004, excluding one-time
integration and inventory step-up costs required under U.S.
GAAP.
In 2000, Zimmer entered into an exclusive,
worldwide strategic alliance for commercialization of Implex's
innovative Hedrocel(R) biomaterial, which Zimmer has marketed
as Trabecular Metal(TM) Technology.
"We call Trabecular Metal 'the best
thing next to bone' because we believe it is the most exciting
new porous material platform the orthopaedics industry has
seen in decades," said Ray Elliott, Zimmer Chairman,
President and CEO. "We look forward to applying our extensive
development resources to the application of the technology
in new areas. We intend to expand the existing Implex line
of spinal products that incorporate Trabecular Metal Technology,
which have already been implanted in Europe and the United
States, into our new Zimmer Spine division. We believe Trabecular
Metal has the potential to give us opportunities in the fusion
and non-fusion spinal categories that other competitors cannot
match."
Zimmer currently markets hip, knee and shoulder
replacement implants, and trauma products using the technology.
The company recently announced it has seven development projects
underway using the material and it expects Trabecular Metal
product sales to grow substantially. Made of the highly biocompatible
element Tantalum, Trabecular Metal is very similar to natural
bone in its porosity, friction, structural strength and bending
characteristics, making it an ideal choice for orthopaedic
implants. Because it is a free-standing structure rather than
a surface coating, it allows for the development of completely
porous devices.
"This was the anticipated outcome of
our Zimmer alliance relationship and is the next exciting
step for Implex in applying our technology to the needs of
orthopaedic patients," said Alex Khowaylo, Implex President
and CEO. "All of us at Implex look forward to playing
an expanding role in strengthening Zimmer's joint reconstruction
leadership and in expanding the company's spinal franchise."
The acquisition is expected to close in
the first quarter of 2004. The boards of directors of both
companies have approved the merger, which is subject to the
satisfaction of regulatory requirements, including SEC and
Hart-Scott-Rodino clearance, approval by Implex's shareholders
and other customary closing conditions. Approval by Zimmer
shareholders is not required.
Visit Zimmer on the Worldwide Web at www.zimmer.com
About Zimmer Holdings, Inc.
Founded in 1927 and headquartered in Warsaw,
Indiana, Zimmer is the worldwide #1 pure-play leader in the
design, development, manufacture and marketing of reconstructive
orthopaedic, spinal and dental implants, trauma products and
related orthopaedic surgical products. The new Zimmer has
operations in more than 24 countries around the world and
sells products in more than 80 countries. In October, 2003,
the company finalized its acquisition of Centerpulse AG, a
Switzerland-based orthopaedics company and the leader in the
European market. For the year 2002, the pro forma worldwide
combined revenues of Zimmer and Centerpulse were approximately
$2.2 billion. On a combined basis, Zimmer and Centerpulse
are supported by the efforts of nearly 7,000 employees.
About Implex Corp.
Implex Corp., of Allendale, New Jersey
is a privately held company founded in 1991 with a focus on
bringing a new technology, Hedrocel biomaterial, to address
clinical issues. Hedrocel biomaterial is an open cell, tantalum
metal structure that approximates the appearance of human
cancellous bone. The ability of the biomaterial to be readily
formed or machined allows it to be incorporated in a wide
variety of implant designs. Because of its highly porous structure
and material properties, bone can grow into Hedrocel biomaterial,
forming a strong bond and potentially eliminating one of the
pathways for particulate wear debris in the joint. Because
Hedrocel biomaterial also can be manufactured to closely mimic
the flexibility of natural bone, the risk of bone loss that
can occur with stiffer implants through a process known as
"stress shielding" may be minimized. Implex designs
and manufactures reconstructive, spine and sports medicine
orthopaedic implants.
SOURCE: Zimmer Holdings, Inc.
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