“This acquisition is another significant step in executing our strategies to position Zimmer for sustained growth in the future. We are excited to be adding a number of innovative products that round out the Zimmer Spine portfolio and help us build toward critical mass in this important business segment,” said David Dvorak, Zimmer President and CEO. “In addition to bringing great products and a promising pipeline, the Abbott Spine acquisition will add to our research and development capabilities in the spinal category and will strengthen our sales coverage.”
Abbott Spine was founded in 1996 and has U.S. headquarters in Austin, Texas, and an international facility in Bordeaux, France. Throughout its history, Abbott Spine has developed a series of innovative technologies and techniques to treat spine disease. Among the key products are the InCompass® Pedicle Screw System; the Pathfinder® Minimally Invasive Pedicle Screw system; the Wallis® Interspinous Stabilizer System (available outside the U.S.); the Ant-Cer® Dynamic Cervical Plate; and the Universal Clamp®.
Zimmer Spine, which is based in Minneapolis, Minnesota, intends to maintain a presence at Abbott Spine's Austin and Bordeaux sites. Abbott Spine has about 300 employees worldwide. "We have great respect for the talent and passion of the Abbott Spine organization. Combining our businesses will enable us to provide better product choice and improved customer service to spine and neuro surgeons as they seek the best solutions for their patients. We look forward to welcoming the Abbott Spine organization and their customers into the Zimmer family," said Mr. Dvorak.
Zimmer expects the transaction to be approximately $0.03 dilutive to adjusted diluted earnings per share in the fourth quarter of 2008, between $0.08 and $0.10 dilutive in 2009 and neutral to slightly dilutive in 2010. These estimates exclude one-time charges related to the purchase price allocation for acquired inventory, restructuring and integration charges, as well as any in-process research and development charge incurred in connection with the transaction. The definitive purchase price allocation will be completed after the close of the transaction; however, Zimmer expects to record an in-process research and development charge of approximately $50 million in the fourth quarter and to step up the value of acquired inventory by approximately $25 million. Zimmer also expects to incur $40 to $50 million in restructuring and integration costs in connection with the transaction, primarily related to the integration of the separate global sales networks.
Zimmer intends to provide additional details about the Abbott Spine transaction during its third quarter 2008 investor conference call, which is scheduled for October 23, 2008.
About the Company
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer designs, develops, manufactures and markets orthopaedic reconstructive, spinal and trauma devices, dental implants, and related orthopaedic surgical products. Zimmer has operations in more than 25 countries around the world and sells products in more than 100 countries. Zimmer’s 2007 sales were approximately $3.9 billion. The Company is supported by the efforts of approximately 8,500 employees worldwide.
