(Story was updated at 3:20 p.m. ET)
Zimmer Biomet Holdings, a major manufacturer of musculoskeletal devices, will buy a spinal device company for $1 billion.
The Warsaw, Ind.-based company will acquire LDR Holding Corp., an global firm that designs and commercializes surgical technologies for the treatment of spine disorders. The all cash transaction is still subject to customary closing conditions but is expected to close in the third quarter.
Zimmer Biomet expects the acquisition to make it a leader in cervical disc replacement and minimally invasive surgery, in part because LDR's Mobi-C device is the only FDA approved device for adjacent one- and two-level disc replacements. LDR's MIVo portfolio of minimally invasive lumbar and cervical fusion procedures is also expected to be a complement to Zimmer Biomet's existing spinal business.
The acquisition would mark an entry into the cervical disc replacement market for Zimmer and offers overlapping customer bases for both companies.
"This combination is consistent with our goal of driving meaningful growth across all musculoskeletal markets with innovative products, technologies and services that enhance patient outcomes,” said Zimmer Biomet CEO David Dvorak.
LDR was founded in France in 2000. LDR's American headquarters are in Austin, Texas.
Zimmer acquired privately-held Biomet in April 2014 for about $10.35 billion in cash and $3 billion in stock. As a condition from the Federal Trade Commission, both companies sold the rights to a number of implant products to other companies to maintain competition in the workplace.
Zimmer Biomet will delay updating its fiscal 2016 guidance to reflect this transaction until at or near the time it closes. It's expected to be neutral to earnings in 2017 and accretive thereafter.
Upon closing, LDR will be combined with Zimmer Biomet's spine and craniomaxillofacial category, led by Zimmer executive Adam Johnson. Christophe Lavigne, LDR's founder and CEO, and Patrick Richard, co-founder and executive vice president, will take leadership positions in Zimmer Biomet's global spine business, according to the company.
Zimmer Biomet will maintain a significant presence in LDR's hubs of Austin, Texas, and Troyes, France, according to the company.
Musculoskeletal devices are receiving significant market attention because of bundled payments that some providers are being given for knee and hip replacements and a growing baby boomer population. Innovation is also changing the space. Stryker, for example, has tapped 3-D printing to develop a porous titanium lumbar cage that is less damaging to the spine and allows for fusion with surrounding vertebrae.
