August 17, 2016
In line with its strategy of growth through inorganic expansion, Zimmer Biomet Holdings, Inc. ZBH has gone for yet another mega acquisition. Earlier this week, this musculoskeletal major announced the buyout of CD Diagnostics, an immunoassays and biomarker testing developer, for an undisclosed term.
This is not the first time Zimmer Biomet and CD Diagnostics have allied. Earlier in 2012, they first partnered to co-develop and market diagnostics targeting the treatment of Periprosthetic Joint Infection (PJI). As part of the deal, Zimmer Biomet marketed the first and only test for the diagnosis of PJI- Synovasure PJI.
We note that, CD Diagnostics particularly specializes in diagnosis of PJI and works in minimizing the complications associated with misdiagnosis, including the pain and incremental costs-of-care following joint replacement surgery.
With this takeover, Zimmer Biomet is anticipated to perfectly leverage the company’s expertise in biomarker detection and immunoassay development. The consolidated company is expected to gain competitive advantage in musculoskeletal diagnostics, strengthen the Signature Solutions offering and advance considerably in the fast growing musculoskeletal market.
Zimmer Biomet has stayed in line with its strategy of expansion through acquisitions evident from its unrestrained bout of takeovers in the recent past. Last month the company completed the $1 billion buyout of LDR Holding. According to the company, the inclusion of this French spine device maker will not only bolster its presence in the $10 billion global spine market by significantly expanding its portfolio of innovative solutions, but will also provide it with a leading position in the fast growing cervical disc replacement (CDR) and Minimally Invasive Solutions (MIS) segments.
The company believes this takeover will meaningfully accelerate its Spine business’ performance through the incremental revenues associated with its entry into the CDR market and cross-portfolio selling opportunities to both companies’ customer base.
We are also looking forward to the grand $13.35 billion acquisition of Biomet. The consolidated Zimmer Biomet is estimated to bring enormous financial benefits from this merger. Net synergies from the merger are currently anticipated to exceed $350 million in pre-tax by the end of the third year, post-transaction.
Zimmer Biomet currently carries a Zacks Rank #3 (Hold).
