| NEW YORK, April 24
NEW YORK, April 24 Medical device maker Zimmer
Holdings Inc is expected to tap the market next week
with a $12.01 billion credit facility to back its acquisition of
Biomet Inc from a consortium of private equity
sponsors, sources told Thomson Reuters LPC.
The facility comprises a $7.66 billion, 364-day bridge loan
to bonds, the same sources said. The financing also includes a
fully committed $3 billion, five-year term loan and a $1.35
billion, five-year revolver.
Credit Suisse is arranging the transaction.
The bridge loan is expected to be replaced with an
investment grade bond before the acquisition closes. The bridge
is not expected to be drawn before that time, according to
The Zimmer deal comes on the heels of a slew of other
healthcare acquisition transactions also announced this week.
Among the deals, Novartis AG and GlaxoSmithKline Plc agreed
to trade some $20 billion in assets, while Eli Lilly and Co
agreed to buy Novartis's animal health business for $5.4
Valeant Pharmaceuticals International Inc also made an
unsolicited $47 billion bid for Botox-maker Allergan Inc.
Though the loan financing component of some of those deals
is not yet public, loan bankers are welcoming the pickup in
"The much anticipated pickup in M&A seems to be
materializing," said a banker following the situation.
Bankers watching the Zimmer transaction expect the company
to syndicate the loans among lenders to both Zimmer and Biomet.
The bridge loan will likely be offered only to selective banking
relationships. The revolver and term loan, meanwhile, are
expected to be offered to a wider group of lenders.
Ratings are anticipated in the triple-B range.
Zimmer announced Thursday 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
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 was Zimmer's financial advisor. White & Case
LLP was legal advisor.
Biomet was advised by Bank of America Merrill Lynch, Goldman
Sachs, Cleary Gottlieb Steen & Hamilton LLP and Weil, Gotshal &
Credit Suisse declined to comment. Zimmer representatives
did not return calls by press time.
The acquisition is expected to close in the first quarter of
(Editing By Jon Methven and Leela Parker Deo)