TRLPC: Zimmer launches $4.35B pro rata package for Biomet buy

NEW YORK Fri May 2, 2014 9:52am EDT

NEW YORK May 2 (Reuters) - Medical device maker Zimmer Holdings Inc is in market with $4.35 billion in credit facilities to back, in part, its acquisition of Biomet Inc from a consortium of private equity sponsors, sources told Thomson Reuters LPC.

Credit Suisse is arranging the transaction that launched via a conference call Thursday.

A $7.66 billion, 364-day bridge loan to bonds fills out the acquisition financing. The company is syndicating the bridge to a small group of banks.

The pro rata portion comprises a fully committed $3 billion, five-year term loan and a $1.35 billion, five-year revolver. Drawn pricing on the revolver and term loan is LIB+137.5 for ratings of BBB/Baa2. The revolver pays 15bp undrawn.

If drawn, the bridge loan also pays LIB+137.5. However, as previously reported, the bridge loan is expected to be replaced with an investment grade bond before the acquisition closes and is unlikely to be drawn before that time.

Zimmer announced on April 24 it would buy Biomet, an orthopedic products company, in a deal valued at about $13.35 billion to broaden its portfolio of products that treat bone and joint-related disorders.

After being taken private in 2007 for $11.4 billion, Biomet currently belongs to affiliates of Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co and TPG.

The consortium had been planning to take the company public, filing for an IPO last month, according to Reuters.

Zimmer will pay $10.35 billion in cash and issue $3 billion in shares to Biomet shareholders.

Zimmer said it expected to fund the cash portion of the deal with cash on hand and $3 billion from a senior unsecured term loan and a senior note offering.

Proceeds from the loans will also refinance Zimmer's debt, including its existing $250 million notes due 2014 and bank debt outstanding, as well as certain Biomet debt, according to a Zimmer's press release.

Credit Suisse declined to comment. Zimmer did not return immediate calls for comment.

The acquisition is expected to close in the first quarter of 2015. (Editing By Leela Parker Deo and Jon Methven)

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